Chancellor George Osborne has done no favours for landlords in his latest Budget autumn statement.
Stating from the start that he had no money to giveaway for tax incentives, he proceeded to explain that the economy may be on the right track to recovery, but still has a long way to go – meaning more years of austerity.
Although initiatives for creating jobs and encouraging businesses to thrive were part of his plan for recovery, some of that money is coming from cash stored up in property prices.
The main tax change for landlords at home and abroad is the halving of private residence relief from 36 months to 18 months.
PRR gave homeowners, especially accidental let and move landlords, a window to sell a residential property that had been their main home before capital gains tax kicked in.
Instead of three years, the limit is 18 months, which adds the same amount of capital appreciation to a capital gains tax bill.
However, expat and other non-residential landlords fared worse.
Osborne announced he considered that non-resident capital gains tax rules were unfair to onshore taxpayers, so he is scrapping them from April 6, 2015.
British expats selling residential property in the UK will now pay capital gains tax.
The rate still has to be decided as a result of consultation in 2014, but Osborne has hinted he is considering a special non-resident rate of 20%.
And as non-residents do not qualify for the annual exempt amount, they can expect to pay more capital gains tax when they sell or dispose of a property than an onshore investor.
“There is one personal tax change we make today which is not about avoidance, but is about fairness,” Osborne told MPs
“Britain is an open country that welcomes investment from all over the world, including investment in our residential property.
“But it’s not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence – while those who don’t live here do not.
“That is unfair.
“So from April 2015, we will introduce capital gains tax on future gains made by non residents who sell residential property here in the UK.”