Fears over property tax hikes in US force a wave of high-value sales in run up to 2013

HIGH-VALUE property owners rushed to sell US dwellings at reduced prices in the days leading up to 1 January in a bid to avoid the tax increases introduced by the so-called fiscal cliff.

The top rate of capital gains tax, which is included on real estate sales, was set to go up 8.8 percentage points to 23.8 per cent if US politicians failed to thrash out a deal to avert the cliff.

The threat of this tax increase triggered a wave of property sales in the months leading up to the new year, research carried out by the Wall Street Journal shows.

One apartment on New York’s Fifth Avenue – once owned by business mogul and former vice president Nelson Rockefeller – sold for $23.9m (£14.7m) last Thursday. It had previously been on the market for $27.5m, and the deal was completed in just 30 days.

The owner agreed to the lower price as long as the deal closed before the end of the year, the New York brokerage that held the listing said.

Another New York property, a three-bedroom apartment facing Central Park, was recently sold for $26m, according to a filing lodged last week. The property’s asking price had been cut from $35m and then again from $29.5m, the research claimed.

Other high-value property deals to have been rushed through before 1 January included the $50m sale of an 18-room Manhattan apartment last week.

The level of expensive property sales and the discounts applied to them is unusually high, but it would work out more favourably to sell them at lower cost than to pay the higher capital gains rates after 1 January.

The rush of sales did not only apply to the property markets, however. Research from the International Business Brokers Association found that fears over the tax increases set to come in meant that business owners hurried to sell towards the end of the year, especially those with firms valued at more than $5m.

The research said that the threat of the fiscal cliff was the biggest issue leading to business sales in the second half of 2012.

This meant that many entrepreneurs sold their businesses for less than they thought they were worth, even in an unappealing economic climate, in a bid to reduce tax payments.