At some point, you may find yourself asking the question, ‘should I sell my investment property?’ Before doing so, you also need think about the costs of selling property, so you can estimate your costs and be sure it’s really worth selling.
To have an estimate of the costs, you first need to determine the price you’ll be able to achieve for your property. If you’ve read our previous articles, you will know how to establish the price range that your property will fall into. When you have an estimate of the price you’ll achieve, you can estimate your costs.
The Costs of Selling Property
- Sales Commission (Agents Fees)
- Marketing costs and Conveyancing Fees
- Capital Gains Tax
It will be relatively east to determine the agents fees, marketing costs and conveyancing fees that you will incur. Speak several local estate agents and solicitors for a guide as to their charges based on your anticipated sale price.
The primary cost consideration for you as an investor will be Capital Gains Tax (CGT). CGT is a tax which is levied on the difference between the sale price of an asset and its original purchase price. Tax on capital gains is only generally triggered when an asset is sold, meaning even though the asset may increase in value every year Capital Gains Tax is only paid at the point the property is sold. So, if you do not sell the property you will never pay capital gains tax.
Many investors may be better off simply re-financing rather than creating a Capital Gains Tax event unless there is a specific reason to realise capital from a sale.
Is it worth selling? Ask yourself a some important questions first…
For many investors, the costs versus the return will simply mean that the property it is not worth selling. Your decision to do so will probably be driven by the following:
- Is the situation going to change in the market? Would you be better off waiting to sell at some point in the future?
- Can you do something else with the money you will receive from selling the property. Your exit costs and acquisition costs are likely to be substantial. You are more than likely to be better off refinancing your existing property and purchasing another property with your gained equity. If you do not have enough equity in your existing property you may well be far better off holding off until you are more liquid.
Capital Gains Tax is complicated and can be a substantial cost. Make sure you seek independent tax advice from an accountant before disposing of your asset.
Capital Gains Tax isn’t applicable in certain scenarios in certain countries such as New Zealand, you’ll find more detailed information about property investment in Australia, New Zealand and the United Kingdom in our Buyers Guides. Request your copy of our Buyers Guides today from [email protected]
We hope you have found this article useful, feel free to comment or ask any questions. For more information on about overseas investment property also check out our other articles.
Important notice: Proptech Pioneer and its associated companies seeks to provide investors with guides, information and tools, but we cannot guarantee this information to be accurate or perfect. You use the information at your own risk and accept no liability if you rely on this information. Proptech Pioneer is not a tax advisor, accountant, conveyance, lawyer, financial advisor or mortgage advisor. You should seek independent advice from independent professionals before making any investment decision