Financial considerations when selling buy-to-let property

When selling buy-to-let property, there is a host of secondary considerations you need to factor in to your decision. This will ensure the transaction is financially advantageous.

Here, we’ll give you some quick tips to consider when selling buy-to-let property.

Capital gains tax

If you acquired the properties you intend to sell several years ago, chances are their property value has increased significantly.

The annual capital gains tax exemption is only £11,300 today. If the proceeds of your sales push you into the higher or additional rate tax band, you’ll be taxed at a hefty 28%.

If you have multiple properties, try selling them over the course of several years to minimise this burden.

Income tax

Within the next few years, landlords will no longer be able to deduct mortgage interest from their tax bill. This will mean landlords who’ve accrued debt will be liable to pay additional income tax.

Consider paying down your other mortgages with the proceeds of your sale. This will limit the amount of income tax due under the new system.

Company status

Setting up a limited company has been tipped by some as a means of maintaining profitability now that landlords have begun to lose tax relief.

Think about transferring your portfolio into a company and applying for ‘Hold-over’ relief to reduce tax on rental income and future sales.

This is just the tip of the iceberg. A specialist landlord accountant can give you all the support and guidance you need when it comes to re-organising your property portfolio.

Call on 3 Wise Bears for more expert buy-to-let accountancy advice.