Is now the time to sell buy-to-let property?
20th May 2010
The Government's planned hike in Capital Gains Tax (CGT) on non-business assets has prompted a surge in buy-to-let investors expressing an interest with estate agents to offload their property before the change takes effect.
Under the new tax rules, property investors who sell their properties will pay tax on any capital gains at the marginal rate of tax (that is, the highest rate of tax they pay on their income, which will often be 40% or 50% for a buy to let investor).
The new rules are likely to be announced in the emergency Budget announced for next month, and then introduced next April when new tax rules traditionally come into force.
A key consideration for buy to let investors will be whether the property can indeed be sold prior to the new rules coming into force.
In relation to newly acquired properties, where the capital gain to date is small, it is unlikely to be worthwhile selling the property, especially if the property is occupied and generating an income for the landlord.
The expected increase of buy to let properties coming onto the market is likely to put further downward pressure on house prices. In addition, the resultant shortage of private rented accommodation available may lead to an increase in average rental costs.
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