Where an asset has been held for a considerable period of time this can give rise to a problem which inhibits a sale, namely that the amount of Capital Gains Tax payable can mean there are insufficient funds to re-invest in order to obtain a similar investment return to that previously enjoyed.
If a property was purchased prior to 1982, the base value which is the trigger point for tax computation is that prevailing as at 5th April 1982 and often the ongoing base value can be indexed after that date.
This has the effect of possibly mitigating the Capital Gains Tax payable thus leaving further money available for re-investment.
It is becoming increasingly more difficult to value as at 1982 as databases are a much more recent phenomenon and where an asset was purchased prior to that date it is strongly recommended that a 1982 valuation be obtained at the earliest opportunity in order to be available in the event of a sale.
There are often ways of mitigating the amount of tax payable and further advice should be sought from a surveyor and an accountant in order to take advantage of this.
We have recently dealt with a situation and disposed of property held for many years which was producing excellent capital growth but inadequate income return for the client needs.
Following successful sales monies were subsequently re-invested and a substantially higher rental income was achieved.
