Capital Gains Tax up to 40%!

Procrastinator333

Thrugelmir wrote: »

Increase in capital gains tax rates may not be the only the change to affect BTL. I would hedge my bets that a restriction in offsetting interest payable against rental income will also come into force.

Blimey, that would be a dream come true. But I don't see it. As others have pointed out before, what is it, 70% of voters own houses.

Making cgt 50% and removing tax deductibility of interest would imo well and truly smash the main prop holding up house prices. Does that not seem the likely outcome if such changes were made to others?

I would be happy to be proved wrong, but can't see them doing it.

Thrugelmir

Procrastinator333 wrote: »

Blimey, that would be a dream come true. But I don't see it. As others have pointed out before, what is it, 70% of voters own houses.

Making cgt 50% and removing tax deductibility of interest would imo well and truly smash the main prop holding up house prices. Does that not seem the likely outcome if such changes were made to others?

I would be happy to be proved wrong, but can't see them doing it.

In Eire only 75% of interest is now allowable against rental income.

A painless way to raise revenue and reduce the speculative investment in residential property which is a sure vote winner.

chucknorris

StevieJ wrote: »

My only point was advice or not it is difficult to sell in 50 days unless you take a hit at auction.

My plan is to immediately do nothing. I wasn't planning on selling up for another 10 years or so anyway, so I can afford to wait. I am getting a good yield and now is not the right time to sell for me. The way I see it is that in 10-15 years the property values would have risen with a possibility of CGT changing again either with a relief (taper or indexation) introduced or perhaps even the headline rate being reduced (if taxes can be increased they can also be reduced). Who knows they may even bring in a taper relief system right now, although I suspect not because of the urgent need to raise tax revenue.

I think it would be a big mistake to panic and sell up, unless of course you are not comfortable holding onto your properties, maybe ill health and looking to retire.

Blacklight

People will just sell the BTL properties for 50% of their value and accept a brown envelope stuffed with notes for the kettle they left in there.

silvercar

Blacklight wrote: »

People will just sell the BTL properties for 50% of their value and accept a brown envelope stuffed with notes for the kettle they left in there.

Please explain where the buyer is getting the notes from? Do mortgage lenders give mortgages in cash based on twice the recorded price?

Vincenzo

Personally I can't see the proposed changes to CGT forcing a max exodus of investors in property. The only scenario where it might be worth selling in the next 50 days (or whenever any changes might come into force) is where the intention already existed to sell soon. In that scenario it might be worth considering selling sooner, assuming of course it is the right time to sell the property in question and you achieved the right price. I would rather pay 50% of £100,000 in say 5 years time than 18% of £10,000 today. Besides, many investors intend never to sell, viewing their property as long term income producing investments.

Of course much will depend on whether you are able to offer the property with vacant possession. If you have just taken in a new tenant on an AST you would not be able to do so for 6 months. Property is not a particularly liquid asset. You are far more likely to see profit taking on the investment markets.

The issue of offsetting interest against income is a much bigger one. I cannot imagine what the justification for this would be. After all any business can offset costs and rightly so. That aside, if investors were no longer able to do so, this would make BTL less attractive for those highly geared investors.

On a general note I find it amusing that people keep calling time on BTL. All asset classes rise and fall in cycles and in favour. To suggest that people will abandon investing in property is complete nonsense.

Thrugelmir

Vincenzo wrote: »

The issue of offsetting interest against income is a much bigger one. I cannot imagine what the justification for this would be. After all any business can offset costs and rightly so. That aside, if investors were no longer able to do so, this would make BTL less attractive for those highly geared investors.

The justification is to raise tax revenues.

Highly leveraged BTL is not a business. Its a pure punt on rising house prices.

chucky

Thrugelmir wrote: »

Highly leveraged BTL is not a business. Its a pure punt on rising house prices.

obviously yield on an investment or even a [STRIKE]guaranteed[/STRIKE] steady amount of incoming cashflow minus costs = profit/loss have no place in your [STRIKE]soundbite[/STRIKE] statement.

StevieJ

Thrugelmir wrote: »

Increase in capital gains tax rates may not be the only the change to affect BTL. I would hedge my bets that a restriction in offsetting interest payable against rental income will also come into force.

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.

StevieJ

Blacklight wrote: »

People will just sell the BTL properties for 50% of their value and accept a brown envelope stuffed with notes for the kettle they left in there.

Watch out you will have Hallmark and Dr Gloom on your case :eek: with Dev stirring it up