Long-term investment is the key to success as Government plans to raise Capital Gains Property Tax

publication date: Jun 1, 2010
author/source: Guest article from Belvoir! Lettings

Long-term investment is the key to success as Government plans to raise Capital Gains Property Tax

“Long-term investment is the key to success,” says Belvoir’s Mike Goddard, as Government plans to raise CGT.

Mike Goddard, CEO of Belvoir, one of the UK’s largest specialist lettings agencies, advises a wait-and-see policy for investors who may be worried about Government plans to raise Capital Gains Tax (CGT).

     “It looks highly likely that CGT is going to increase at the emergency budget, probably as a direct consequence of the Coalition Government having to raise the revenue necessary to pay for an increase in the income tax threshold to £10,000,” says Mike. “However, I think it will be unwise to jump to too many conclusions until we have seen the finer details of the government’s proposals, as we don’t yet know what the new rate will be or whether there will be benefits that may help to counter any increase.

     “As a specialist lettings agency Belvoir has always advised investors to be cautious about investing in property purely because of its potential capital appreciation. CGT always depends on a rise in capital appreciation and any investment decisions should be based on the rental yield that can be achieved from a property. If buy to let property is viewed as a long-term investment, based on the rental that can be achieved now and an increase in that rent over the years, then capital gains becomes less important.

     “Secondly, until we know the full details of the Government’s proposals we will not know if there are any plans to offset an increase in CGT. There may, for example, be plans to include taper relief (i.e. the longer you hold your asset the less CGT you have to pay), which was enforced some ago and was then phased out.

     “At present I don’t think we need to view the situation with the rental market as all doom and gloom, particularly for those investors who are in this business for the long haul. I strongly advise potential investors to always seek the advice of a specialist lettings agent who is able to provide realistic and unbiased advice about rental yields.”

For further information or to arrange an interview with Mike Goddard, please contact Andrea McHugh, 01476 567438/07940 930 331, email: andrea.mchugh1@ntlworld.com

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