Can I avoid the Section 24 tax completely?
In short, yes you can avoid the Section 24 tax completely, but it may come at a big cost to you. As we said earlier, you can become a limited company, moving your portfolio under it, to make yourself exempt from Section 24 but you will be hit by stamp duty tax and capital gains tax, alongside other fees, making it a costly option.
Another way to completely avoid the Section 24 tax is by selling your property portfolio, a method which can have little to NO cost, depending on how you choose to sell…
You can also sell your property with tenants 'in situ' - something that may make your property appeal to other current landlords, or ‘soon to be’ landlords!
To help you decide the best method for you to sell to avoid the Section 24 tax and as many other costs as possible, let’s look at the options when it comes to selling:
Estate agents
Probably the first option which comes to mind when you think of selling a property (or five) to help avoid the Section 24 tax is through an estate agent on the open market. This route will involve an estate agent viewing and valuing your property, listing it on the open market and different property portals, and waiting for interested parties to come forward to arrange viewings and (hopefully) make offers.
Offers placed have no guarantee of being at the asking price of the house and are likely to be subject to survey, meaning a buyer may choose to reduce their offer, or even withdraw their offer completely, after a survey has taken place, leaving you stuck with the Section 24 tax for longer.
It’s also a costly option, leaving you with lots of fees to pay (we’re thinking legal fees, estate agent fees, survey fees and more). Also, if you’re trying to sell the property with sitting tenants, it may be difficult to arrange viewings around them or the tenants may be rude to viewers, putting off any potential buyers, making selling through the open market a more difficult and less desirable option.
If you’re a landlord with a big property portfolio, selling on the open market to avoid the Section 24 tax may also be difficult, as you will have fees to pay on every property sold and you will be expected to keep on top of arranging property viewings, which is increasingly difficult with the more properties you own.
Selling through an estate agent is also a slow option, with the average time taken for completion 18 weeks (The Advisory), meaning you will have to pay the Section 24 tax for a longer time, costing you more money.
Part exchange
A part exchange scheme is where you trade the value of your current house against a new build property, with your property acting as a ‘part payment’ for the new build. If you’re after a quick house sale, a part exchange scheme could be a good option, as it means a guaranteed sale of your property and no chain.
However, if you’re selling properties to avoid the Section 24 tax, then a part exchange will not be a helpful selling method for you, as you’re gaining a new property as a ‘replacement’ for the one you were trying to ‘cut ties’ with.
If you want to find out more about Part Exchange, then read this.
Auction
Another option you have to sell your properties to avoid Section 24 tax is through an auction. At auction you get serious buyers, who will exchange contracts as soon as a hammer comes down and will complete in 20 to 28 days, helping you to sell your properties quickly, avoiding further tax costs.
However, even at auction, buyers can and do pull out of sales, meaning they forfeit their deposit. Also, at auction, you will have to have several open days to allow potential buyers the opportunity to properly look at the property. This may not be the best option if you’re selling tenanted properties, with tenants adding an extra difficulty to arranging viewings.
Also, at auction, you have to cover your own legal fees and you have to pay a commission of the sold price to the auctioneer and pay for advertising and marketing costs, as well as room hire, making it a costly option, especially if you have a large portfolio.
The price your house sells at, at auction, can also be significantly below the ‘market price’. The buying of your property will also be subject to a survey, so there are no guarantees the sale will go through.
The sale can also take between 6-10 weeks to complete, meaning you will be stuck paying the Section 24 tax for even longer…
If you're wanting to know more about selling a house at auction, then click here.
Cash house buying company
Selling to a cash house buying company, also known as a ‘quick house sale company’, may be another road for you to go down when trying to sell to avoid the Section 24 tax.
Quick house sale companies will give you a cash offer for your property, which is a guaranteed price and therefore means you have a guaranteed buyer. Your legal fees will be covered by the company and you don’t have to pay any commissions or fees – essentially you can sell your portfolio for free!
As the name suggests, quick house sale companies specialise in buying your properties FAST, helping you escape the Section 24 tax ASAP! Some quick house sale companies can have the property sold and cash in your bank in as little as 7 days.
Unlike on the open market and at auction, selling to a cash house buying company only involves one quick house viewing, to help ensure that the valuation and offer for your property is as accurate as possible, making it easier to arrange if you have tenants in situ.
The offer you will get is generally slightly below the market value of the property, but it’s a quick cash sale, making it quicker and easier to sell a big portfolio.
If this option sounds like something you might need, to help you get away from the Section 24 tax, then you’ll be wondering where to find a quick house sale company…
HINT - you're looking right at one
Here at The Property Buying Company, we’re a cash buyer of houses, buying any property in any condition, in as little as 7 days, all whilst covering your legal fees!
Our offer isn’t subject to a survey and we only require one quick viewing to make sure our offer is accurate, which we can arrange for a date and time to suit you and any tenants.
Our offer may be slightly below market value, but our average completion time is 2-3 weeks, meaning you can quickly sell your property and escape the Section 24 tax!
We have over 50 years’ combined experience in the industry and countless good reviews on trust pilot (feel free to check them out), which we believe shows we’re a quick house sale company you can trust.
To get you on your way to selling your portfolio and avoiding the Section 24 tax, all you need to do is give us a call or fill in our online form to receive a no-obligation cash offer – it’s worth a try!
