​This far reaching report will teach you all you need to know to “Avoid Paying Too Much Capital Gains Tax” when selling your property portfolio - - - - -

​Capital Gains Tax

reduce the ​tax you pay

​ all the details you need 

​avoiding capital gains tax on property

​more portfolio profits - ​pay less tax

​7 minute read

introduction

Avoiding capital gains tax on property sales is something all property owners and investors are interested in.

And this is even more relevant for those looking to sell an entire property portfolio - where the combined Capital Gains Tax bill on all those properties could be eye-watering.

The ​traditional routes for selling a property portfolio are:

​TRADITIONAL ROUTES

  1. Auction House
  2. Business Broker
  3. Estate Agent
  4. Commercial Agent
  5. WeBuyAnyHouse online companies

​However one of the main problem with the above selling routes is that all your properties get sold at the same time. So you can end up paying far more Capital Gains Tax than you ever need to.

​Managing all of those portfolio sales yourself over a number of years is of course possible. But do you have the skills, time and ​buyer contacts to handle all these sales ​on your own?​

​So let's now take a look now at Capital Gains Tax on portfolio sales in a lot more detail - and show you ways ​to reduce or even eliminate your tax bill entirely.

All in the report below...

Sell your property portfolio

  • ​No Fees
  • ​Less Tax

what exactly is capital gains tax

Capital Gains Tax is a tax you pay on properties when you sell. This tax is only payable on any PROFIT you make ie the difference between the buying price and the selling price.

Capital Gains Tax ISN'T PAYABLE on your main residence - ie your home that you live in. So what we're actually discussing here is the rental properties within your property portfolio. And how Capital Gains Tax is applied to them upon disposal.

There are other forms of Capital Gains Tax - but we're only discussing how it ​relates to property sales within this report.

Capital Gains Tax profits

Say you bought a property for your portfolio for £100,000 and it's now worth £150,000. The profit is £50,000 - so £50,000 is subject to tax.

  • Selling price £150,000
  • Purchase price -£100,000
  • Profit = £50,000

Capital Gains Tax fees 

Now let's imagine this same property incurred purchase fees of £5,000 (solicitors fees, stamp duty, mortgage arrangement fees etc). And you also paid out improvement costs of £13,000 (new kitchen, new bathroom etc). Then the total of these 2 costs comes to £18,000.

So the amount of profit is now £50,000 - £18,000. Meaning your TAXABLE PROFIT is really £32,000. So you only pay Capital Gains Tax on £32,000

  • Selling price £150,000
  • Purchase price -£100,000
  • Purchase costs -£5,000
  • Improvement costs -£13,000
  • Taxable profit = £32,000
avoiding capital gains tax on property allowance

capital gains tax allowances & examples

The UK government gives an annual Capital Gains Tax allowance to all UK tax payers. And so avoiding capital gains tax on property sales is all about using this allowance intelligently.

Example 1a) - single person

Single person Capital Gains Tax allowance for 2020/2021 = £12,300

  • Selling price £150,000
  • Purchase price -£100,000
  • Purchase costs -£5,000
  • Improvement costs -£13,000
  • Taxable profit before allowance = £32,000
  • Capital Gains Allowance -£12,300
  • Taxable profit = £19,700

Example 1b) - married / partners

Two person Capital Gains Tax allowances for 2020/21 = £12,300 x 2

  • Selling price £150,000
  • Purchase price -£100,000
  • Purchase costs -£5,000
  • Improvement costs -£13,000
  • Taxable profit before allowance = £32,000
  • Capital Gains Allowance -£24,600
  • Taxable profit = £7,400

How much is Capital Gains Tax on property?

  • For a basic rate tax payer Capital Gains Tax rate is set at 18%
  • For a higher rate tax payer Capital Gains Tax rate is set at 28%.

So once again looking at: "Example 1b) - married / partners" above:

  • Basic rate tax payer - £7,400 x 18% = £1,332 to pay
  • Higher rate tax payer - £7,400 x 28% = £2,072 to pay

Higher rate of tax

Bad news here is that your property profit (after paying Capital Gains Tax) is also counted as income. So you can be forced into a higher rate of tax just by virtue of selling property and taking profits.

avoiding capital gains tax on property tax

Selling a portfolio examples

We've now looked at an overview of Capital Gains Tax and how your annual allowances are worked out - let's now look at how all of this affects the sale of multiple properties within your property portfolio.

​Selling just a single property is relatively easy to understand from the examples above. But what about selling an entire property portfolio with say 20 properties - how does that all work?

Example 2) - married / partners selling a portfolio of 20 properties at once

Let's look at the same value of property as in example 1b) above, but imagine the owner is instead selling a portfolio of 20 properties in 1 year:

  • Selling price (£150,000 x 20) £3,000,000
  • Purchase price (-£100,000 x 20) -£2,000,000
  • Purchase costs (-£5,000 x 20) -£100,000
  • Improvement costs (-£13,000 x 20) -£260,000
  • Taxable profit before allowance = (£32,000 x 20) £640,000
  • Capital Gains Allowance -£24,600
  • Taxable profit = £615,400

Capital Gains Tax payable on 20 properties

  • For a higher rate tax payer Capital Gains Tax rate is set at 28% and the seller would certainly be pushed into this higher rate tax bracket.
  • Higher rate tax payer - £615,400 x 28% = £172,312 tax to pay

do you really want to pay all that extra tax?

I'm sure you can see there's a HUGE increase in extra tax to pay when you compare selling just a single property with selling a portfolio of 20 properties.

  • Sell 1 property in 1 year = £2,072 in TAX
  • Sell 20 properties in 1 year = £172,312 in TAX

So if you have a portfolio of properties to sell I'm sure you'd rather not pay any more tax that you need to?

so let's now look at a much smarter way to sell - and save on all that nasty tax.

avoiding-capital-gains-tax-on-property-umbrella

sell smarter over multiple years

It would be much smarter to sell these 20 properties over a number of years. Because that way multiple years of Capital Gains Tax allowances can be utilised - to drastically reduce ​the tax bill.

​Here's ​a further example showing how selling a portfolio over a number of years​ ​will ​slash the amount of Capital Gains Tax payable.​

Example 3) - married / partners selling a portfolio of 20 properties - structured over 10 years

​Let's look again at the same value of property as in example 2) above, but imagine the owner is now selling a portfolio of 20 properties over 10 years (instead of 1 year):

  • Selling price (£150,000 x 20) £3,000,000
  • Purchase price (-£100,000 x 20) -£2,000,000
  • Purchase costs (-£5,000 x 20) -£100,000
  • Improvement costs (-£13,000 x 20) -£260,000
  • Taxable profit before allowance = £640,000
  • Capital Gains Allowance (-£24,600 x 10 years) = -£246,000
  • Taxable profit = £394,000

Capital Gains Tax payable on 20 properties

  • Because the owner is now selling over 10 years - they're more likely to be a basic rate tax payer.
  • Basic rate tax payer - £394,000 x 18% = £70,920 tax to pay

So there's a HUGE saving in tax to pay - because:

  • Tax to sell 20 properties in 1 year (example 2) = £172,312
  • Tax to sell 20 properties over 10 years (this example) = £70.920

Saving of tax = £101,392

​Save over £100,000 ​in tax

I'm sure given the choice between either paying £101,392 in tax - or not paying £101,392 in tax - you'd ​prefer not to pay?

However the obvious downside here is it taking several years to sell the portfolio. Not good!!

A better option would be to sell the portfolio to someone who'll BUY all 20 properties at the same time. But who will actually ACTIVATE the sales (from a land registry point of view) over a number of years.

Because that way the sales would happen in one go - all done and dusted - AND the Capital Gains Tax liability is reduced by utilising multiple years of allowances.

Makes sense?

more profits - pay less tax

Here at Property Portfolio Sales we have the experience and skill to buy your property portfolio today. Yet structure the sales over a number of years - to ensure YOU keep more of the profits.

This is achieved by using "A Structured Sale Plan".

​structured sale plan

​A structured sale plan allows ​you to ​sell your property portfolio in one clean transaction - ​AND also gives ​you the ability to register the sales over a number of years.

So in a nutshell this means:

  • YOU sell your portfolio - head off into the sunset - and enjoy the rewards.
  • WE structure the purchase of your portfolio to ensure your Capital Gains Tax bill is minimised.

PS Every portfolio we come across is unique and different. So don't let the fact that your portfolio "isn't perfect" put you off from getting in touch.

​A structured sale ​plan allows us to purchase ​your portfolio​ - anywhere - no matter the issues.

How much is your time worth?

As well as the savings of Capital Gains Tax - there is also the huge saving on time. Can you imagine the time it would take to sell all 20 properties - one property at a time?

  • Where would you start?
  • How many viewings would it take?
  • How many buyers would pull out last minute?
  • Wouldn't you rather be doing something more interesting instead?

​Anything else?

The examples above are purposefully simplistic. Your actual tax position will have many other factors to take into account - when working out your overall tax position.

  • In ​the examples we've used the SAME Capital Gains Tax allowance of £12,300 for 10 years for simplicity. But of course this allowance will change over the 10 years.
  • Capital Gains Tax rates of 18% and 28% have been used, but of course these rates might change over 10 years.
  • The examples are based on properties of the exact same value. And the same amount of capital growth. All highly unlikely in the real world.

However the concept is sound for every portfolio we've come across.

Capital gains tax on property previously lived in

Your Capital Gains Tax position is subject to many other factors such as whether you've ever spent a period of time LIVING in a rental property? And if so for how long?

Negative equity

There's still a lot of portfolios across the UK that have properties in negative equity.

An example of negative equity is where a property that was purchased for £180,000 during the peak of the property boom - is actually now worth LESS at say £170,000.

There isn't a capital gain - so no Capital Gains Tax is due upon a sale - as there isn't any profit.

In this case there's a Capital LOSS of -£10,000.

This loss can be used to offset profits on other properties. And in later years.

Accountant / Independent Financial Advisor (IFA)

You of course need to talk to your accountant / Independent financial Advisor for an accurate tax position.

We're NOT tax advisors and aren't offering you any financial advice on what to do here.

That's where your Accountant and IFA ​can help you.

avoiding capital gains tax on property conclusion

avoiding capital gains tax on property sales conclusion

Avoiding Capital Gains Tax on property sales - your property portfolio - is something you need to ​consider carefully. Because ​the way you sell your portfolio will impact considerably on the amount of Capital Gains Tax you'll ​need to pay.​

  1. ​You could sell your portfolio via one of the traditional selling routes. But this ​could expose you to a high Capital Gains Tax bill - along with ​selling fees and discounts.
  2. ​Alternatively you could sell your portfolio yourself over a number of years - to utilise multiple years of capital gains tax allowances
  3. ​Or better still you could consider selling via a structured sale - where you sell all your properties at the same time. However the actual sales on land registry are staggered to reduce your Capital Gains Tax bill - and no selling fees or discounts.

If you'd like to learn more about a structured sale then please get in touch with us here at Property Portfolio Sales​.​

Sell your property portfolio

  • ​No Fees
  • ​Less Tax

Property Portfolio Sales - Getting in touch

Thanks for reading our website.

If you'd like to learn more about selling your property portfolio to Property Portfolio Sales - then please ​get in touch for an informal chat​.

​Contact us via: ​EmailContact Form 0800 77 234 88 - WhatsApp​ - whichever you prefer.

​You can ​tell us about your portfolio​ - ​and then together we can ​look at ideas on ​possible ways for you to sell.

Kind regards.

property portflio sales phil calladine

Phil Calladine - proprietor & consultant

Phil Calladine
 

"Hi there - I'm Phil Calladine - living in Lymm in Cheshire, UK. I have a wealth of property knowledge - and I'm sharing it with you here on this website. I'm also a member of the NRLA. Please don't hesitate to contact me with any questions about selling your property portfolio"

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