What effect will an increase in Capital Gains Property Tax have on the market?

publication date: May 24, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

What effect will an increase in Capital Gains Property Tax have on the market?

It was only two years ago (April 2008) that Capital Gains Property Tax (CGT) which ranged from 10-40% on second properties, depending on how long you owned them for and what level of tax you paid, was reduced to a flat rate of 18%.

Now with the pending government cuts in spending and the need for measures to increase taxes, it looks like CGT on second homes could be back!

Initial thoughts are that in the forthcoming emergency budget at the end of June, Mr Shapps, the new Conservative Housing Minister, will announce an increase in CGT at least back to the old rates (20% for basic rate taxpayers and 40% for higher rate tax payers). But this time round the rise may even be higher and reach the 50% tax rate for high earners.

How might this affect you?
If you own a second home and/or are looking to make money out of your buy to let portfolio, then this could seriously affect how much you could make from selling the property.

Up until now it was probably worth waiting out the property market crash to gain more value in your property(ies) before you sell. However now, especially if you are a higher rate tax payer, it is ESSENTIAL to seek specialist property tax advice either before or as soon as the tax changes are announced.

What we don’t know is if taper relief will apply, which means the longer you hold the property for, the less CGT you end up paying. Under the old rules the minimum amount was 10% if you had held the property for 10 or more years.

Need to find a good tax property specialist? Then contact us via enquiries@designsonproperty.co.uk or tel 0845 838 1763.

Need help with a property problem? Have a question? Why not call Designs on Property on 07585 897128 or Contact Us via email.
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