Readers may not recall but it is 70 years to this day that a floatila of tiny boats rescued hundreds of thousands of stranded troups froms the clutches of the German army. D day changed the course of the war.I've been interested to read over the last few weeks the number of pundits and media types who have been stressing about how the potential rise in the Capital Gains Tax rate is going to kill the buy-t0-let sector. Even the Financial Times was getting in on the act at the weekend.
CGT increase will not kill buy-to-let
Well frankly this is all a load of tosh. No landlord or investor should go into buying a property thinking that they are going to sell up in a few years time. The average holding period for a buy-to-let property is in the region of 15-20 years so who knows what will happen to the economy, the tax system and specifically the rate of CGT by then.
Firstly, for any landlord who is truly desperate not to pay CGT on the disposal of their buy-to-let property you can. You just will need to go and live in it for a short period of time and thereby claim Principal Private Residence (PPR) relief.
Secondly, if you are thinking of disposing of your property now ask yourself why? Most landlords on base rate linked buy-to-let mortgages are making very decent rental profits. The income returns on buy-to-let property are far higher than anything available in a savings account. So ask yourself should I really be selling now anyway?
Thirdly, the potential rise of CGT to the same rate of income tax in my mind is only a rebalancing of a tax system that over the last 13 years has become 'nonsensesical' and ridiculously complicated. The brief lowering of the CGT to 18% was an aberration bought in by a Labour government seeking to boost CGT tax revenue in the short term by encouraging individuals to dispose of assets and shore up middle class political support. It was largely unsustainable.
NLA wasting their breath
Therefore, my point is that organisation's such as the National Landlords Association (NLA) who are campaigning against the rise in rise in CGT are wasting their breath. CGT will rise. A rise to bring it in line with income tax is sensible. What we should all be clamoring for is lower taxes and less waste.
A CGT rise will not kill buy-to-let. Landlords will benefit far more in the long run from a healthy growing economy based on a lower overall tax take which will feed through to higher property prices.
So landlords lets stop panicking Mr Mainwaring.
Lets embrace the Dunkirk spirit. Remember we are British. Lets take the rise on the chin. Together we can win the war against the deficit! It's a small sacrifice to make in order to achieve a more secure future for us all.
I agree that CGT will not kill BTL. NLA members I've spoken to are very much in it for the long run and won't be rushing to sell off all their properties in a bid to beat the rise in CGT.
ReplyDeleteAnd as for the NLA wasting its breath on the CGT rise, well, I wanted to clarify exactly what we're calling for.
The NLA wants the Treasury to recognise letting as a legitimate business and therefore include capital gains from the sale of residential property in the wide-ranging “generous exemptions” which have been hinted at by Government.
So far, over 2,500 people have also 'wasted their breath' supporting our campaign...
you make your money when you dont sell any way if you keep it for 5 years a new goverment will be in they will maybe reduce it to 15% think long lerm i bought 1 house 12 years ago for £15 still have it it is now worth £120k in a deep recesion
ReplyDeleteHi Tony, Do you mean £15,000? £15 would be very impressive indeed!
ReplyDeleteI came into property when CGT was 40%. Now that it's reverted back to 40%, well, nothing's changed.
ReplyDeleteThe NLA is campaigning that the Private Rented Sector should be treated like a business with all the tax breaks businesses get. However, they're forgetting all the bureaucracy and expense this entails.
Besides, if you want the business tax breaks, form a limited company.
Capital gains was never a strait 40% as indicated you had indexation
ReplyDeleteand later tapered relief witch lowered it to 24 % after ten years .
so for an asset held for ten years the tax rise would 7 % not 32% as
indicated if you where on the 50% bracket, any way if the put it up this high
i will simply keep it for ever 50% of nothing is 0 tax Many thanks to John
Redwood for beating the drum !!!!!!!!!!!!!!!!!!!!! Sir John sound good !!!!!!!!
Capital gains was never a strait 40% as indicated you had indexation
ReplyDeleteand later tapered relief witch lowered it to 24 % after ten years .
so for an asset held for ten years the tax rise would 7 % not 32% as
indicated if you where on the 50% bracket, any way if the put it up this high
i will simply keep it for ever 50% of nothing is 0 tax Many thanks to John
Redwood for beating the drum !!!!!!!!!!!!!!!!!!!!! Sir John sound good !!!!!!!!