Landlords feel benefit of CGT changes

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by Gill Montia

Landlords are feeling the benefit of the changes in capital gains tax (CGT) introduced at the beginning of April.

Research from buy-to-let lender, The Mortgage Works, shows that those who sold rental properties in the second quarter of 2008 paid roughly half as much CGT as they would under the old tax regime.

The Mortgage Works bases its calculations on the cumulative property price increase over the last five years on a £200,000 flat and house.

The firm has estimated an achieved property price appreciation of 43% on houses and 42% on flats to the first quarter of 2008.

Landlords who sold during the first three months of the year faced CGT liability of £30,597 on houses and £30,241 on flats.

However, landlords selling properties in the second quarter of 2008 paid a flat rate tax of 18%, bringing tax liability for houses to £16,581 and £15,975 for flats.

When the figures are worked on a regional basis they reveal that landlords who bought property outside London and the South East achieved the greatest reduction in their tax burden, by selling property after the April changes.