Capital Gains Tax up to 40%!

chucky

Thrugelmir wrote: »

I did say highly leveraged.

Unfortunately many amatuers who jumped on the bandwagon in more recent years are dependent on capital growth in order to generate a profit. One thing many had in common was the lack of capital to invest, often releasing existing equity to fund the deposit.

Interest is a cost, so profit is determined after interest is deducted.

you can be as highly leveraged as you like as long as your interest repayments plus costs is less than your income. you obviously have a profit.

**i can't see many people getting into BTL if you're not going to make any money or make a loss from the incoming rent**



**cue the anecdotal stories of people cousins uncles nephew's neighbour only just about breaking even on their portfolio of BTL properties

chucknorris

dealsearcher wrote: »

Getting back to the thread title ....

I would say that the government should really introduce a 40% CGT with a taper relief arrangement. A straight increase to 40% would put too much of a shock into the system. People who have owned property for some years under different CGT rules could be placed in considerable difficulty with such a sudden change in the system. People who buy to let subsequent to any increase in CGT rate will know what they are getting in to. People who have bought before can not be expected to have forecast such a change.

It could well be that they will re-introduce the taper relief as they said there would be generous reliefs for business assets. This could be a reference to the old taper relief which gave double the relief to business assets over non business assets. If they did this then it wouldn't be that much of a change only to people selling who haven't held the asset that long and surely anyone selling property wouldn't be showing much (if any) profit in any case if they had not bought it quite a few years ago.

StevieJ

Thrugelmir wrote: »

You are quite correct. However I would have thought the primary long term objective is to make an after tax profit.

Yes easier if it is tax deductable

BTW from a post on the other thread

“If we’d fought a proper Conservative campaign, we could have won the election outright and implemented our own manifesto. Instead, we’re giving jobs to Liberal Democrats and putting up taxes. We’re hardly going to celebrate that, are we?”

Suggests that the 40/50% CGT increase will have to mellow some to appease Tory backbenchers.

Thrugelmir

chucky wrote: »

you can be as highly leveraged as you like as long as your interest repayments plus costs is less than your income. you obviously have a profit.

Then the investor is taking a punt as obviously the converse is that you make a loss.

Harry_Powell

StevieJ wrote: »

I can't see that at all, it would be discriminatory against a particular sector that provides a roof over the head of many, a reduction in LHA is more likely.

There are already discriminatory measures in place against BTL. For instance, you can't invest in residential proerty in a SIPP (though you can invest in commercial property) and you can't claim Entrepreneur's allowance on capital gains for property businesses.

dealsearcher

chucknorris wrote: »

It could well be that they will re-introduce the taper relief as they said there would be generous reliefs for business assets. This could be a reference to the old taper relief which gave double the relief to business assets over non business assets. If they did this then it wouldn't be that much of a change only to people selling who haven't held the asset that long and surely anyone selling property wouldn't be showing much (if any) profit in any case if they had not bought it quite a few years ago.

Yes there is much quoted about generous reliefs for 'business assets', but what about the individual owner? Individuals have far less protection than limited companies.

Thrugelmir

StevieJ wrote: »

BTW from a post on the other thread

“If we’d fought a proper Conservative campaign, we could have won the election outright and implemented our own manifesto. Instead, we’re giving jobs to Liberal Democrats and putting up taxes. We’re hardly going to celebrate that, are we?”

Suggests that the 40/50% CGT increase will have to mellow some to appease Tory backbenchers.

Tax rises were a certainty. Whoever formed a Government post election.

Increasing CGT actually closes a loop hole in the tax system. Which the rich were able to exploit.

Blacklight

I like the way everyone's suddenly in agreement that property purchase = capital gain. Price of metals will take a tumble on the back of the sudden increase in supply of recycled tin foil hats.

One minute people are preaching that the mother of all crashes is *still* just around the corner, next they're jumping for joy that huge HPI will be taxed.

Make your minds up.

kennyboy66_2

StevieJ wrote: »

Yes easier if it is tax deductable

BTW from a post on the other thread

“If we’d fought a proper Conservative campaign, we could have won the election outright and implemented our own manifesto. Instead, we’re giving jobs to Liberal Democrats and putting up taxes. We’re hardly going to celebrate that, are we?”

Suggests that the 40/50% CGT increase will have to mellow some to appease Tory backbenchers.

The Tory backbenchers must be living in a trickle down fantasy land.
The Tories can rightly claim to be the party of low taxes (at least in aspiration), but in both Ken Clarkes era and post 1981 recession, the mechanism for closing a structural deficit is roughly one part spending cuts and one part tax rises.
No one will simply be able to cut spending quick enough to deal with the deficit.

The great advantage with increasing VAT (as an example) is that will it will decrease demand, some of this decrease in demand is felt by importers - no bad thing.

chucknorris

dealsearcher wrote: »

Yes there is much quoted about generous reliefs for 'business assets', but what about the individual owner? Individuals have far less protection than limited companies.

Well the old taper relief used to give 50% relief for 'non busibess' assets when held for 10 years (I think it was 10 years, I forget). 50% relief would bring the 40% back down to 20%