Why 18% Capital Gains Tax Is Not Just A Selling Advantage But A Buyers Dream? On April 6 th this year, the CGT system was reformed so that investors no longer had to pay 40% on any gains on property sold. Instead, investors will simply pay a flat 18%, not including any personal annual allowances.
This reform is not only an advantage to sellers, but it could also be a great opportunity for skilled investors. There have been thousands of novice investors getting into real estate over the past few years, and many of those investors lack the knowledge and understanding of how to buy and sell for the biggest profits. This new reform could be a stimulant for them to bail on their investments. This could mean thousands of new investment properties on the market at the same time - basically a buyer's dream!
Let's not forget that the market is relatively stagnant at the moment. When you add on all these extra properties, especially one and two bedroom flats, the market becomes flooded. This will allow skilled investors to offer the sellers 10, 15 and even 20% below their asking price. And, if the novice investor is eager to get out of the market, they may very well accept. Now, their tax implication is only going to be 18% instead of the previous 40%, so that leaves them 22% extra to play with. Once you pencil all this into the equation, you can see why now might be one of the best times to be entering the real estate investment market.
Remember to look at the market. Look at the position of the seller. Look at their motivations. Then, you can decide what you would be willing to offer for their property. As professional investors, our position is strong at the moment. It is your job to understand that and to understand how you can best negotiate from that position. The changes that happened on April 6 th are just another sign to start investing! |
