House Prices Are Cheaper in 2023 Than They Were in 2007 (in REAL TERMS)

House Prices Are Cheaper in 2023 Than They Were in 2007 (in REAL TERMS)

9:45 AM, 30th October 2023, About 6 months ago 13

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According to HM Land Registry, the average sold house price at the peak in September 2007 was £190,032. However, as of August 2023 that figure is £291,044.

But surely that’s a gain of £101,032 I hear you say!

Well, from a tax perspective, it is, and if you had purchased an average property in September 2007 and sold it in 2023 you would have paid a whopping £28,283.26 in Capital Gains Tax (assuming it wasn’t your own home).

However, here’s the rub. If you enter the numbers into the Bank of England inflation calculator this is what it returns …

So, assuming you built your property rental business over the last 15 years but now want to sell a few to reduce your exposure to financing costs you’ve got a bit of a CGT problem to deal with.

The good news is that there are solutions.

How does this help?

The company acquires the business (including the properties) at market value.

The capital gains are rolled into the shares.

If your company sells properties for the value it paid for them there is no capital gain to be taxed.

You would only pay the Capital Gains Tax if you were to sell the shares.

What about Stamp Duty and the costs of refinancing though?

That’s a great question, but not a simple one to answer. You will need us to calculate and compare the savings on CGT against the costs of Stamp Duty and refinancing. There may be no cost, depending on your circumstances, but there will always be legal costs to make the transition. However, without knowing the numbers you would be reliant on luck rather than judgement to make a decision. Why on earth would anybody do that? Well, cost perhaps!

The really good news is that we only charge a fixed fee of £400 to look into these scenarios for you, and we can also point out other pros and cons as well as tax and non-tax-related features and benefits of incorporation over and above private ownership.

Book a Landlord Tax Planning Consultation

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  • For the avoidance of doubt, we are able to assist landlords who own properties in England, Northern Ireland, Scotland and Wales. Where you reside is not a problem, even if you are resident outside the UK.
  • Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).

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Comments

Dylan Morris

11:28 AM, 24th November 2023, About 6 months ago

Sorry if I’m a bit think but the article says “you now want to sell a few to reduce your exposure to financing costs”. So how are financing costs reduced here ?

Mark Alexander - Founder of Property118

11:53 AM, 24th November 2023, About 6 months ago

Reply to the comment left by Dylan Morris at 24/11/2023 - 11:28
Just suppose your mortgages were 50% of your property values.

By selling just one property you might be able to repay two mortgages.

howdidigethere

23:06 PM, 24th November 2023, About 6 months ago

What everyone MUST understand is that we are not experiencing prices going up, but rather the purchasing value of the currency going down.

Monetary inflation is NOT rising prices, it is the debasement of our currency through the counterfeiting by Central Banks, otherwise known as Quantitative Easing.

This is the root of the reason why Mark's article is true.

Real Assets, always appreciate in high "inflationary" periods because there is a much slower creation of them against the speed of creation of new money (QE).

In a country like the UK where there is a property deficit, the "increase" in value of property is more than the rate of the fraudulent CPI or slightly less fraudulent RPI.

The game is whether you can cashflow the rates and fees and tax and legislation and whatever else they throw at you to keep the thing ticking over.

It's a game of Usury.

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