A 60-day return is not required when there is no tax on disposal. This can occur when:
• The disposal is a ‘no gain, no loss’ transfer between spouses or civil partners;
• Any gain arising on the disposal will be fully covered by exemptions, for example, the annual exemption or Private Residence Relief; or
• The property is being sold at a loss or nil gain.
• Taxpayers selling their only or main residence should not be caught by the 60-day rules, provided the property has been occupied by them throughout their period of ownership.
The rules apply to disposals of UK residential property where the date of disposal (date of exchange of contracts) falls on or after 27 October 2021 and a CGT liability arises on the disposal.
The 60-day rules apply to direct interests in the residential property only, for example, the sale or gifting of a house. Transfers of indirect interests, such as shares of a corporation that owns residential properties in the United Kingdom, are not taken into account.
The definition of residential property includes any property suitable for use as a dwelling, or which is in the process of being constructed or adapted for such use. If there has been mixed-use throughout the ownership period, only the residential element of the gain and the associated CGT needs to be reported under the 60-day rules.
Typical examples where taxpayers may need to submit a 60-day return include:
· A property they have never lived in, or only lived in for part of the ownership period;
· Holiday homes; and
· Rental properties.
Things to plan for:
· Taxpayers planning on selling or gifting residential property should consider whether there is a reporting requirement under the 60-day rules.
· Taxpayers should collate information as early as possible, to minimise the risk of missing the 60-day deadline and assist with cashflow planning.
· Where a property disposal results in a loss, a 60-day return does not need to be filed. However, in certain circumstances it may be beneficial to file a return to claim the loss with HMRC.
· Taxpayers should consider whether there are opportunities to realise capital losses prior to disposing of a residential property.
· Taxpayers should be aware of the changes to the reliefs available on the sale of properties which have not been their main residence for the entire period of ownership.
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