Beware even bigger taxes when you come to sell

ONE reason to stick with property investing is the profit you can make when you sell.

House price rises have dried up over the past few years, but they’re starting to pick up again.

Yet experts say some landlords are desperately selling up now to avoid a change to the way capital gains tax (CGT) will be applied to sale profits they are set to make.

Currently, when you sell a property for more than you paid for it you pay CGT on any profit above £12,000 (there are exceptions, see main copy).

This has to be settled by January 31 of the tax year after the sale. In practice, that means up to 22 months to pay up.

From April, your CGT bill will have to be settled within 30 days of the sale. This could pose a problem for some investors, such as couples going through a divorce who are selling a former marital home.

Jason Hollands, of wealth manager Tilney, warns that the future could be darker still for landlords hoping to profit from house price rises.

The Conservative Government has pledged not to raise the ‘triple lock’ of three key taxes – income tax, VAT and National Insurance – but not CGT.

‘There is some speculation that CGT could be an area where taxes might rise in order to help the Government meet its spending pledges,’ Hollands warns.