MANY short-term investors who saw buy-to-let property as a fast track to easy profits now face a possible capital gains tax bill if they lose their nerve because of falling rents and sell at the wrong time.

Property continues to provide some of the best investment returns. However, an over-supply of lettings in certain areas has prompted landlords to consider selling prematurely.

The warning comes from IRPC Taxation Services, whose helplines support clients insured against possible tax investigations. Currently, there are a record number of calls about taper relief on capital gains tax. Taper relief reduces the proportion of the capital gain that is taxable when selling assets such as property. However, it does not normally apply to non-business assets during the first three years of ownership.

Alan Frazer, business director of IRPC Taxation Services, said: “Anyone thinking of an early sale because of falling rental income should balance this against a serious loss of profit arising from capital gains tax. They should consult a tax accountant about the best time to sell.”