Thursday, October 25, 2007
CGT Changes Will Be Bad for Furnsihed Holiday Lets
There is still a considerable clamour on the chancellor to amend his plans on changes to capital gains tax to make it more palatable to businesses.
We will have to wait and see – but I don’t think much will change – as there will be too much political face to be lost if Darling changes things now..
One class of investors who lose out is people with furnished holiday lets. Unlike buy to let investors, who generally gain under the proposed move to an 18% flat capital gains tax rate, owners of furnished holiday homes lose out.
This is because they are treated just like any other business and currently get a different more generous type of taper relief called Business Asset Taper Relief (as opposed to the “Non Business” version that applies to buy to lets). With this only 25% of the gain was taxable after owning for 2 years or more – giving a higher rate taxpayer a rate of effectively just 10% to pay.
At a new flat 18% rate, they will pay more from April 5th 2008.
Then again, there could be a compensating factor at work here too. As a result of the of lower CGT rates on second homes, more people will buy second homes for themselves. This could increase house values in rural and coastal areas - just those places where where there are many holiday lets.
If you need more advice on capital gains tax or letting property please ask me. I’m David Lawrenson from property investment consultants www.lettingFocus.com
I’m the author of property investing book “Successful Property Letting - How to Make Money in Buy to Let”
I’m an expert on buy to let and a well known freelance property writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a property investment and mentoring service
You can read more of my landlord blog and details of my networking, advice, property seminar programme at my website www.lettingfocus.com.
My next London property networking meeting is on November 14th. Click here for details: Property Investment Seminar
What’s unique about lettingfocus.com is that we offer independent property investment advice because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week
We will have to wait and see – but I don’t think much will change – as there will be too much political face to be lost if Darling changes things now..
One class of investors who lose out is people with furnished holiday lets. Unlike buy to let investors, who generally gain under the proposed move to an 18% flat capital gains tax rate, owners of furnished holiday homes lose out.
This is because they are treated just like any other business and currently get a different more generous type of taper relief called Business Asset Taper Relief (as opposed to the “Non Business” version that applies to buy to lets). With this only 25% of the gain was taxable after owning for 2 years or more – giving a higher rate taxpayer a rate of effectively just 10% to pay.
At a new flat 18% rate, they will pay more from April 5th 2008.
Then again, there could be a compensating factor at work here too. As a result of the of lower CGT rates on second homes, more people will buy second homes for themselves. This could increase house values in rural and coastal areas - just those places where where there are many holiday lets.
If you need more advice on capital gains tax or letting property please ask me. I’m David Lawrenson from property investment consultants www.lettingFocus.com
I’m the author of property investing book “Successful Property Letting - How to Make Money in Buy to Let”
I’m an expert on buy to let and a well known freelance property writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a property investment and mentoring service
You can read more of my landlord blog and details of my networking, advice, property seminar programme at my website www.lettingfocus.com.
My next London property networking meeting is on November 14th. Click here for details: Property Investment Seminar
What’s unique about lettingfocus.com is that we offer independent property investment advice because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week
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