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<\/figure><\/div>\n\n\nLandlords are also concerned about rental reform, high taxation and higher energy efficiency standards. This is according to the UK Landlord Report by Simply Business.<\/p>\n\n\n\n
Almost half of landlords had sold a property in the last year or are planning to do so. This \u201ccomes as little surprise when you consider the pace of market change. As well as tax disincentives such as Section 24 and the stamp duty surcharge\u201d.<\/p>\n\n\n\n
That\u2019s not taking into account the aftermath of the mini-budget announced by former Chancellor Kwasi Kwarteng on 23 September 2022. This piled even more risks onto landlords after the Bank of England signalled it could raise interest rates to 6%. As a result, some buy-to-let landlords may see their profitability decline when they go to refinance their loans.<\/p>\n\n\n\n
Data issued by Hamptons suggests many will face losses if interest rates shoot up. It said the average higher-rate tax-paying landlord could expect their annual net profit to plummet from \u00a33,198 to \u00a3884. This is a 72% decline.<\/p>\n\n\n\n
If the 0.5 percentage point rate to 2.25% passes to mortgage costs, that could slash profits to \u00a3212 a year. If the base rate were only to nudge up to 2.5%, that same landlord could expect to make a loss.<\/p>\n\n\n\n
That leaves some investment property owners, in effect, faced with two options. Firstly, they can raise rents in the hope a tenant will pay it to keep the landlord in profit territory. Alternatively, they can sell up. Meanwhile, some analysts predict house prices could fall by up to 20%, which puts more pressure on sellers.<\/p>\n\n\n\n
But selling a residential property comes with its fair share of tax obligations. Namely capital gains tax (CGT), which could end up costing you a fair amount of money. There are, however, ways to mitigate your tax bill.<\/p>\n\n\n\n
You should only sell a buy-to-let residential property after talking through your specific situation with a financial adviser.<\/strong><\/p>\n\n\n\n Capital gains tax is a tax on the profit you make when you sell (or \u2018dispose of\u2019) certain assets and property that has increased in value from when you first purchased it.<\/p>\n\n\n\n The total amount of money is not what is taxed, rather the amount gained from the disposal. For instance, a painting bought for \u00a35,000 and sold later for \u00a325,000 would have made a \u00a320,000 gain.<\/p>\n\n\n\n Therefore, landlords who invest in property to take advantage of house price growth will almost certainly have paid CGT in the past or are likely to do so in the future.<\/p>\n\n\n\n CGT is paid on:<\/p>\n\n\n\n You pay a different rate of tax on gains from residential property than you do on most other assets.<\/p>\n\n\n\n If you\u2019re a higher or additional rate taxpayer, you\u2019ll pay 28% on your gains from residential property and 20% on your gains from other chargeable assets.<\/p>\n\n\n\n However, you\u2019re a basic-rate taxpayer, the rate you pay depends on the size of your gain, your taxable income and, again, whether your gain is from residential property or other assets:<\/p>\n\n\n\n If you have gains from both residential property and other assets, you can use your annual exempt amount against the gains that would be charged at the highest rates first.<\/p>\n\n\n\n The annual exempt amount for capital gains is \u00a312,300 for the 2022\/23 tax year. You are entitled to an annual exempt amount each year. So planning your asset or property disposals over the long term is important to save money on tax.<\/p>\n\n\n\n You must report and pay any capital gains tax on most sales of UK residential property within 60 days.<\/p>\n\n\n\n If you own a business that buys and sells property (you\u2019re a property developer, for instance), you do not pay CGT when you sell a property.<\/p>\n\n\n\n Instead, you\u2019ll pay income tax if you\u2019re a sole trader or partner or corporation tax if you\u2019re a limited company.<\/p>\n\n\n\n Non-UK residents and landlords are liable to pay capital gains tax with a non-resident capital gains tax return if they sold or disposed of UK property before 5 April 2020.<\/p>\n\n\n\n From 6 April 2020, non-resident capital gains tax needs to be reported and paid using the capital gains tax on UK property service<\/a> if you sold or disposed of:<\/p>\n\n\n\n Luckily for landlords, there are ways to reduce a CGT bill.<\/p>\n\n\n\n First, the amount of capital gains tax payable will reduce if the landlord lived there themselves. This is applicable at any time during the ownership of the property.<\/p>\n\n\n\n<\/a>Capital gains tax on residential property<\/h2>\n\n\n\n
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<\/a>Property developers and businesses<\/h2>\n\n\n\n
<\/a>Non-resident CGT on UK property<\/h2>\n\n\n\n
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<\/a>CGT deductions for landlords<\/h2>\n\n\n\n