CGT changes reduce tax bill for landlords

Research from The Mortgage Works shows that landlords who sold their properties in the first quarter of 2008 paid more capital gains tax (CGT) that those who waited until the second quarter.

Landlords who sold residential letting properties paid an average of £30,597 on houses and £30,241 on flats which, alongside cumulative income tax over the five year period created a total tax bill of £34,895 for houses and £34,603 for flats. Those who waited until the 18% CGT flat rate came into effect in the second quarter of the year, paid about half these amounts: £16,581 for houses and £15,975 for flats.

The managing director of The Mortgage Works, Andy McQueen, said the figures show that in spite of the credit crunch landlords are remaining vigilant and the buy to let market is still active.

Research from Association of Residential Letting Agents (ARLA) backs up McQueen's view. A study that measured landlords' desire to sell property revealed that landlords continued to monitor a variety of market factors carefully when handling their portfolios.

The percentage of landlords who said they had intentions or expectations to sell property fell from 18.1 per cent in March 2008 (possibly in anticipation of the CGT changes), to 7.3 per cent the following month, suggesting landlords were choosing to bide their time in a market of falling house prices.