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Capital Gains Tax (CGT) rise to 28%-what does it mean for Investors in Aberdeen’s Property Market?
23rd June 2010

Property Investors should be aware of three things:-

-CGT is only payable on the sale or transfer of a relevant property to a third party

-Annual exemption stays at £10,100

-Spouse exemption remains, so spouses should consider transferring their assets to the basic rate paying spouse who will then take over the joint or other person’s base figure and then only be taxed at 18% CGT on any gains on sale after their annual exemption.

With talk of increases to 40 or even 50% , the 28% rate seems reasonable and also is palatable to the public who are looking for everyone “to share the pain” in some way, and this increase should not really have landlords losing too much sleep, bearing in mind that they will only pay that on a sale.
It should be borne in mind that we are really almost at the lowest rung of property prices for a good number of years, with it almost being a game of snakes and ladders where the substantial gains of the last 7 or 8 years being wiped out by the throw of a dice and a slip down a ladder in the last two years.

Prices are undoubtedly going to rise in Aberdeen over the next few years as they are already starting to do, so our advice would be to take a mid to long term view and if you don’t need to sell just now then don’t.

If you do need to realise assets in the near future then you have a calculation to do, which is, do you sell now and realise 28% on a lower gain than you are likely to make in a year or so’s time as prices have risen.

Due to the immediate effect of the rise to 28% then this will avoid a panic selling of property in Aberdeen which would have resulted in a surplus of properties and a reduction in prices as a result.

At K.W.A.D we are always happy to discuss matters such as these.

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