Auction House News Article - Beat possible Capital Gains Tax rises with a property auction

Are you looking to sell up before possible Capital Gains Tax (CGT) rises? Then you may want to consider unconditional auctions.

An uneasy atmosphere

Rumours are flying that CGT could be raised in the Autumn Budget on the 30th October, which could significantly impact property investors’ profits. Currently, higher rate taxpayers pay 24% on property gains, but this could potentially be raised in the Budget to align with income tax rates. This would put CGT at 40% or 45% for higher earners.

As CGT is only paid upon the sale of a property, a possible increase will not affect long-term investors who have no immediate plans to sell.

However, the failure of the government to rule out CGT raises has put other landlords and investors on high alert, particularly as this comes on the back of further announced changes. Vows to strengthen the Renters’ Rights Bill, which could abolish no-fault evictions, and announcements that landlords will need to improve their properties’ Environmental Performance Certificate (EPC) ratings, have left both parties feeling unsettled.

“This has created an uneasy atmosphere in the private rental market,” comments Olivia Boulting, Regional Manager and Auctioneer of Auction House South West. “There’s been a lot of change in the sector and now we don’t know whether CGT changes will come into force at the end of October or implemented later. As a result of all the uncertainty, we’ve already seen many landlords looking to sell their rental properties.”

The clock is now ticking down to the 30th October, which means there is little time left for other landlords to sell up and beat the possible rises. “Due to the complexity of the conveyancing process, there’s no way property owners will now be able to get contracts exchanged before the 30th October if they sell via the private market and estate agents,” explains Olivia Boulting.

The beauty of auctions

However, this doesn’t mean if you’re looking to sell that you’ve missed your moment.

Unconditional auctions provide security to sellers as the buyer enters a legally binding contract the moment the hammer comes down. At this time, contracts are exchanged, which is the point at which a taxpayer becomes liable for CGT. Completion then takes place in around 28 days, meaning you could sell your property before any rises are enforced.

“Auctions present a fantastic opportunity for sellers who want to escape the uncertainty before the Autumn Budget,” says Olivia Boulting. “The process is so much easier and quicker. The other beauty of auctions is that your tenants can stay in situ during the sales process. This means you can continue to earn income right up until the last moment.”

Another plus if you’re a landlord selling up is that nothing needs to be done to your property. “Many landlords or investors are actually looking for something they can add value to,” explains Olivia Boulting.

There are benefits for buyers too, who can pick up a tenanted investment that earns them an income straightaway while also gaining development opportunities.

Olivia Boulting Auction House South West

Getting ready for auction

To beat the potential CGT rises and auction your property, you need to allow around four weeks’ notice. You can then be entered in one of our upcoming auctions, three of which occur the day before the Autumn Budget is due to be announced.

These auctions are:

1st October
• National Online Auction

2nd October
• National Online Auction

8th October
• National Online Auction

10th October
• Auction House Scotland auction at the Radisson Red, 25 Tunnel Street, G3 8HL

15th October
• Auction House Sussex & Hampshire
• Auction House London livestream auction
• National Online Auction
• Auction House Copelands livestream auction

16th October
• Auction House North West online auction