Q & A
EXECUTIVE DIRECTOR, DOUGLAS & GORDON
Q I have a house that I’m renting out and I’m worried about changing capital gains tax rules. Should I stay or sell?
A From next year, capital gains tax relief will be limited to 18 months of capital growth, as opposed to 36 months previously.
This means that you’ll have half the amount of time to sell a second home before you pay tax on it.
Many home owners who’ve moved to the country have seen London house values go up whilst their rural property has gone down.
So in an area like Balham, where capital house values are up almost 70 per cent over three years, there could be a sizeable extra tax bill if you hold on to your second property.
This is persuading many people to sell, which may be enough to convince you to do the same, but not everyone has such a herd mentality.
Given an easing credit cycle, ongoing lack of supply, loose monetary policy, and a ready supply of tenants, it would be a brave person to bet against a few more years of solid growth, both in capital values and rents.
Also, post-Budget pension changes mean you’ve now got the option to use your pension pot to pay off the mortgage. Maybe those selling now are pulling out of the property market right before a windfall.