Capital Gains Tax up to 40%!

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Thrugelmir wrote: »

It wasn't meant as a comment directed directly at the developers themselves. More an observation on the market in general.

Property developers have considerable margin when building large scale developements. The issue more recently was that as property prices rose it was actually the cost of land which commanded a premium. Not the build, marketing and funding costs.

Close to where I live. A HA has recently acquired an entire new mixed housing developement of 378 units (2/3/4 bed houses). As the lack of demand evapourated. There is good rental demand locally but lack of finance and return seems to have caused BTL interest to evarpourate.

If the government enforced Resource Account Budgeting on land banks, say, set at 10% of its valueper annum, I think you could bet your lilly @ss the housing shortage would be solved overnight.

Developers should be forced through taxation to develop the land they sit on.

dealsearcher

Is it just me who is suspicious of this apparent move to 40% with a severe cut in CGT allowance? There has been very little official word of this except the new government saying that the aim is to bring CGT in line with income tax. The 40% seems to be media speculation.

I am suspicious that people are being scared into selling up before the budget for a short term increase in the CGT take for the government. After all if they actually go ahead with a 40% rate for CGT and reduce the allowance to £2,000 per person it will put a severe shock into the rental and stock markets. The result would be a massive drop in property and share market turnover and a resultant fall in CGT take for the government.

I know many people would put off selling their property until there is a change in the form of taper relief or future reduction in the CGT rate.

Entertainer

kennyboy66 wrote: »

The same argument is used by benefit claimants. Not worth working is it, if I lose my x.y,z.....

The problem with having CGT rates that are substantially lower than 40% tax rate is that a whole industry has grown up to turn reliable cash stream businesses into units that can be churned from one p/e company to another, turning income into a capital gain.

No it's not the same. An investor has a choice whether he risks his money in a particular venture or not, ergo make the tax regime too punitive so it is not worthwhile and you get x% of nothing and lose the very vital investment in the economy. A benefit claimant has obligations to actively seek work, if they are unemployed, in order to receive benefits.

Vincenzo

Higher CGT could lead to ‘more expensive property purchases’

26/05/2010 09:00

AWD Chase de Vere claims increases in capital gains tax will be a spur for wealthy investors to acquire more expensive homes to shelter their cash from Her Majesty’s Revenue and Customs.
The financial adviser said the purchase of more costly properties would look attractive to investors who wanted to avoid paying a higher rate of up to 50% on their capital gains from other investments. 26/05/10 Times 42

Makes sense.....

SuperSeagull

My mother handed her house over to my brother, my sister and myself in 1987 on the condition that she lived in it for the duration of her life. My sister has since passed away and my brother and I are determined not to sell the house so as to ensure that her ex husband does not get any of the proceeds, due to a family feud. If we do not sell it on the passing away of my mother how long would we need to keep it to not be liable for this proposed new rate of CG? Could either of us move into it to aid this and if so for how long need we live there?

Kohoutek

SuperSeagull wrote: »

My mother handed her house over to my brother, my sister and myself in 1987 on the condition that she lived in it for the duration of her life. My sister has since passed away and my brother and I are determined not to sell the house so as to ensure that her ex husband does not get any of the proceeds, due to a family feud. If we do not sell it on the passing away of my mother how long would we need to keep it to not be liable for this proposed new rate of CG? Could either of us move into it to aid this and if so for how long need we live there?

See a solicitor!

It's not just a question of tax law, it's a question of the law of equity as to who has the proprietary rights over the home and in what proportion between you, your brother, your sister's estate and your mother's ex-husband.

SuperSeagull

Kohoutek wrote: »

See a solicitor!

It's not just a question of tax law, it's a question of the law of equity as to who has the proprietary rights over the home and in what proportion between you, your brother, your sister's estate and your mother's ex-husband.

Sorry didnt make it clear. The house was my fathers and he left it to my mother who in turn handed it over to my brother sister and myself. My sister died and she and her husband had a mirrored will leaving everything to each other if either died. There doesnt appear to be any provison in my sisters willl for my sisters share to go to her 3 children, my mothers grandchidren and her chidren by her first mariage. It now transpires that her husband had children by previous wives and we suspect that his share will be willed to them rather than my sisters children. Hence the reason that we do not wish to sell the house and hope that he dies.

DavidLaGuardia

SuperSeagull wrote: »

My mother handed her house over to my brother, my sister and myself in 1987 on the condition that she lived in it for the duration of her life. My sister has since passed away and my brother and I are determined not to sell the house so as to ensure that her ex husband does not get any of the proceeds, due to a family feud. If we do not sell it on the passing away of my mother how long would we need to keep it to not be liable for this proposed new rate of CG? Could either of us move into it to aid this and if so for how long need we live there?

As has been said, get proper advice on this which should include a solicitor.

Was it a strightforward gift or in trust? If it was just a gift it was bad avice as Apart from a huge risk if she had mercenary kids who wanted her out or if they were honest but went through bankruptcy or a messy divorce case then, I believe (though you would need to check) that had she had placed it in a interest in possession trust that gave her life time residence, it would have also retained the main residence exemption.
If you have owned it since 1987, moving into it for any time will ONLY exempt you from the same proportion of the gain that the residency represents out of the total period of ownership. As the last three years is always excluded from a property that has always been your home at any time henceforth this is the minimun number of years that can be excluded. Would seem a lot of hassle really.