The housing market is experiencing a decline in gains as property prices continue to fall. According to the latest house price index from Nationwide, property values have fallen at the fastest pace in 14 years on an annual basis.
Landlords looking to sell their properties this year not only face a market downturn but also a reduction in the tax-free allowance. In April, the capital gains tax allowance was reduced from £12,300 to £6,000, and it will further decrease to £3,000 after April 2024.
For example, a landlord selling their property this year for £94,800 more than its purchase price and paying 40% income tax will now lose £24,864 in profits to the tax office, compared to £23,100 in 2022.
Official figures indicate that 139,000 taxpayers reported 151,000 property sales in 2022-23, resulting in charges totaling £1.8bn.
A study by Hamptons revealed that 6% of investors sold their buy-to-let properties for less than they bought them for.
Housing expert Beveridge commented: “As approximately 35,000 landlords reach the end of their fixed-rate mortgages each month, the pressure to balance costs continues to grow. Landlords are striving to manage their finances by paying down debt and increasing rents that have fallen below market rates.”
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