Is it worth it after CGT?
It would seem many landlords are selling up, ‘but’ is this where capital gains tax comes in?
As an example:- I have read if a property rises in value to leave £300,000 after taking away purchase price exp’s etc. After the measly £13000, allowance taking into account the capital gains tax thresholds with rates of 20% and 28% respectively the capital gains tax bill would be around £80,000!
Have I got this right?
It would seem the rental income over the years mostly goes to the government by another name!
I believe corporation tax is slightly lower?
Many thanks
Lalo
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Member Since January 2016 - Comments: 297 - Articles: 1
11:41 AM, 30th November 2021, About 4 years ago
and how many tenants will get evicted?
Member Since July 2021 - Comments: 6
12:10 PM, 30th November 2021, About 4 years ago
This thread is an interesting one and returns to the importance of the structure of one’s portfolio at the outset. Getting the structure right is increasingly crucial as we continue to be legislated against. There are many ways you can mitigate the effects of the various taxes (CGT / IT / IHT), but this requires careful and bespoke attention.
I would add leverage to the conversation of ‘is it worth it.’ We know the historic growth trend of property prices over the medium / long term. Couple this with ability to leverage and an ever increasing asset base can make for a comfortable retirement and maximised legacy for your loved ones WITHOUT crystallising CGT / downsizing your portfolio.
See Mark A and Alex C’s thought-provoking conversation on this point here > https://www.youtube.com/watch?v=q-b6ZDA3AG8
Member Since October 2021 - Comments: 3
2:03 PM, 30th November 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 29/11/2021 – 12:57
Every bit! The member bought a property x years ago and if he sold it now he couldn’t buy a similar property because of CGT. Various Chancellors removed Indexation Allowance and then Taper Relief creating a totally unfair situation for taxpayers.
Member Since July 2017 - Comments: 463
8:51 PM, 30th November 2021, About 4 years ago
It is very easy to construct an ISA portfolio and get a tax free yield of around 4%. There are lots of Individual shares like Aviva, Legal and General, Shell, National Grid. You can get even more diversity by incorporating a few investment trusts such as City of London., Claverhouse and Mercantile. Not only will this portfolio yield around 4% but the income (dividends) will generally increase by at least the rate of inflation.
Member Since January 2011 - Comments: 12193 - Articles: 1395
10:45 PM, 30th November 2021, About 4 years ago
Reply to the comment left by max Gardiner at 30/11/2021 – 14:03
Fair point well made
Member Since April 2019 - Comments: 59
7:04 AM, 1st December 2021, About 4 years ago
Reply to the comment left by at 30/11/2021 – 20:51
Yes. Personally I am diversifying a bit out of property. As you said you can use annual £20K ISA stocks and shares allowance for yourself and wife each year. You can buy a low cost ETF global tracker (accumulator and auto reinvest divis) from Vanguard. Single stocks are more risky and the FTSE 100 is weighted by too few companies and historically has not done well compared to US. I also think that even if you have agents look after your properties ( I self manage and use agents) you still get hassle as decisions have to be made.
Member Since June 2014 - Comments: 1562
9:25 AM, 1st December 2021, About 4 years ago
A bit drastic perhaps, but anyone financially astute will take measures to mitigate unfair taxes;
https://www.property118.com/good-reasons-landlords-become-non-resident-tax-purposes/
Member Since September 2018 - Comments: 3508 - Articles: 5
11:41 AM, 1st December 2021, About 4 years ago
Reply to the comment left by Monty Bodkin at 01/12/2021 – 09:25
Is this still applicable now?
Member Since January 2011 - Comments: 12193 - Articles: 1395
12:46 PM, 1st December 2021, About 4 years ago
Reply to the comment left by DSR at 01/12/2021 – 11:41
Yes it is
Member Since September 2018 - Comments: 3508 - Articles: 5
1:42 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 01/12/2021 – 12:46
….now considering my escape options….. 😉