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New government policy: Will buy-to-let investors lose out?
carolt
Posts: 8,531 Forumite
Loved this article:
http://www.guardian.co.uk/money/blog/2010/may/12/buy-to-let-capital-gains-tax
Full of great quotes.
Like:
"Capital gains tax will be raised in a new government policy to be included in an emergency budget. This could see a flood of properties for sale as buy-to-let investors look to beat the rise.
Incoming chancellor George Osborne has just 50 days to present an emergency budget in which he plans to raise capital gains tax from 18% to 40% (or possibly 50%) on non-business assets, news that may send buy-to-let investors into panic mode.
Already the property market is alive with rumours that over the next few weeks any buy-to-let investor who was considering selling will bring forward that decision and offload their property as soon as they can. The result? A flood of two-bed apartments on to an already flattening market could spark a rapid downward price spiral.
To many this will be hugely welcome. The shock is that it is a Tory chancellor who is prepared to do it.
Ronnie Ludwig, partner at chartered accountants Saffery Champness, says: "In advance of these changes being formalised we are likely to see people scramble to take gains, prompting a rush of sales of second homes and share portfolios."
The simple arithmetic means it will make sense for a buy-to-letter to cut asking prices to shift a property rather than face a post-budget tax hike. For example, the sale of a £200,000 property originally bought for £100,000 with a 40% tax bill will net its owner £160,000 (after a 40% tax on the £100,000 gain). Cut the price to £180,000, sell it while tax is still 18% and the owner will pick up a net £165,600. So get prepared for a quick sell-off. And if you're a buyer you might want to hold back on any offer you are thinking of making."
http://www.guardian.co.uk/money/blog/2010/may/12/buy-to-let-capital-gains-tax
Full of great quotes.
Like:
"Capital gains tax will be raised in a new government policy to be included in an emergency budget. This could see a flood of properties for sale as buy-to-let investors look to beat the rise.
Incoming chancellor George Osborne has just 50 days to present an emergency budget in which he plans to raise capital gains tax from 18% to 40% (or possibly 50%) on non-business assets, news that may send buy-to-let investors into panic mode.
Already the property market is alive with rumours that over the next few weeks any buy-to-let investor who was considering selling will bring forward that decision and offload their property as soon as they can. The result? A flood of two-bed apartments on to an already flattening market could spark a rapid downward price spiral.
To many this will be hugely welcome. The shock is that it is a Tory chancellor who is prepared to do it.
Ronnie Ludwig, partner at chartered accountants Saffery Champness, says: "In advance of these changes being formalised we are likely to see people scramble to take gains, prompting a rush of sales of second homes and share portfolios."
The simple arithmetic means it will make sense for a buy-to-letter to cut asking prices to shift a property rather than face a post-budget tax hike. For example, the sale of a £200,000 property originally bought for £100,000 with a 40% tax bill will net its owner £160,000 (after a 40% tax on the £100,000 gain). Cut the price to £180,000, sell it while tax is still 18% and the owner will pick up a net £165,600. So get prepared for a quick sell-off. And if you're a buyer you might want to hold back on any offer you are thinking of making."
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Comments
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And of course, and BTLer who was thinking of selling may decide to keep the property earning income longer rather than selling up with less profit to bank.
Personally, it makes no difference to me and I may still buy more property if the right ones come to the market.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0 -
lol - here's a tip for any BTLer out there.
live in the rental property for a short time (6 months i think it is) then you have 3 years PPR on it then you can sell it without having to pay Capital Gains Tax for 3 years. after the 3 years are up you get a further allowance of up to £40k where you don't pay Capital Gains Tax.
the other option that you have is run the BTL properties out of a Ltd Co - CGT is much lower there. you're also able to avoid paying large amounts of income tax and national insurance by paying yourself dividends instead.
there's always a way around all of these little changes in the law 0 -
Umm, advising someone to go & rob a bank would be equally useful....
Legal loopholes or methods of tax avoidance are one thing. Defrauding the Govt by pretending you've lived somewhere in order to evade tax would be pretty low on my list of things to do. Actually you'd be better off robbing a bank, probably get dealt with more leniently if you got caught...0 -
I should imagine it would freeze up BTL sales if anything, it would destroy margins on the next business venture so may as well stay where they are, unless of course they change the status of BTL to business rather than investment.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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exactlyI should imagine it would freeze up BTL sales if anything, it would destroy margins on the next business venture so may as well stay where they are, unless of course they change the status of BTL to business rather than investment.
it will hit people with 2nd homes more than anyone.but then again do people with 2nd homes tend to sell them?
if they do just live in it for a short while or get the PPR allowance then sell it.0 -
yes of course - the edit function that you used on my post is quite eveident...Doctor_Gloom wrote: »Oh dear. Fraud Alert.
my post = Last edited by chucky; Today at 7:34 PM..
your post =
Today, 7:40 PM
unless I've developed a flux capacitor to time travel - it would have been a tough one....0 -
yes of course - the edit function that you used on my post is quite eveident...
my post = Last edited by chucky; Today at 7:34 PM..
your post = Today, 7:40 PM
unless I've developed a flux capacitor to time travel - it would have been a tough one....
Nice one Chucky
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Is a BTL landlord going to kick out paying tenants to move into a property he does not particularly want to?
If they have a mortgage on their own property, how would this work? It would surely be easy to prove residence there?0 -
Are you seriously claiming not to have written those words? I'm not the only person to have seen them, 'hallmark' obviously did too.yes of course - the edit function that you used on my post is quite eveident...
my post = Last edited by chucky; Today at 7:34 PM..
your post = Today, 7:40 PM
unless I've developed a flux capacitor to time travel - it would have been a tough one....
I hit the quote button before you had the chance to edit your post. And submitted my post after you had edited yours which fully explains the timings.0
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