UHY Ross Brooke Chartered Accountants

Tax implications of selling your buy-to-let property

accountant for landlords

116,000 buy-to-let properties were lost from the UK residential sector last year, and around 70,000 buy-to-let landlords exited the market.

Why are so many landlords selling their rental properties?

Tax breaks for landlords have been whittled away over the last few years, tenants’ legal rights have improved and many landlords also face substantial costs for raising their properties’ minimum EPC rating from 1st April 2025.

Taxes and allowances for landlords:

  • Landlords used to be allowed to deduct finance costs and mortgage interest from their earnings which reduced their income tax. This allowance was reduced from 2017 until it reached 0% in 2020, resulting in many landlords having to declare higher income and finding themselves in a higher income tax bracket.
  • Wear and tear expenses tax allowances have been reduced since 2016. Landlords can now only claim for replacing furnishings and may no longer claim up to 10% of rental income per annum for wear and tear.
  • In 2020, the cut to Private Residence Relief (PRR) increased the Capital Gains Tax (CGT) that a landlord had to pay when selling a rental property which used to be their main home. This has hit many accidental landlords hard.
  • A 3% stamp duty surcharge is levied on buy-to-let properties.
  • From 2016/17 CGT on residential properties has been set at a higher level than other capital gains.
  • From 6 April 2023 the Capital Gains Tax annual allowance is set to fall from £12,300 to just £6,000.

What this means for you

Based on the above it’s hardly surprising that so many landlords are considering leaving the market. If you are a landlord planning on selling in the foreseeable future do please contact us in order to discuss how to minimize the tax payable on sale with our specialist accountants for landlords.

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