Budget 2012 Btl Tax Breaks

[Bland Unsight]

Which is precisely why it would drive up house prices, hard and fast.

A halfwit in the arms of mortgage broker takes a lot of beating on this front. Are you sure an institutional investor with a 40 year investment horizon will drive prices harder and faster.?

[AndyAndy]

That was a properly reasoned argument. I suspect you were confused by its simplicity, but the truth is often simple.

This proposal has no basis in economics and therefore entirely discredits any suggestion that the Conservative party believe in or understand free-market economics. This is true whether you voted for them or not.

Don't labour and the lib dems support the idea of a residential reit too. In fact didn't labour introduce reit rules for commercial investment in the mid noughties. Surely free market economics requires as its foundation a level playing field for all entrants. The corporate investor relies in its investors for its capital. It pays tax on its gains at the corporate rate 25% (reducing to 23%). To get the money to the investor it needs to then dividend the money to the the investor. Assume 50% a taxpayer, that investor pays tax at a rate of approx 37% on the dividend. So take a hypothetical £100 gain. The corporate investor pays £25 in tax leaving £75 to distribute and distributes that to the investor who pays £27.75 (37% x 75) in tax. The private individual pays CGT at 28% so £28 on £100 gain. By investing in BTL himself the investor is better off by £24.75 on every £100 of gain. The argument works at 40% taxpayer level too. So clearly the investor goes BTL himself , the corporate cannot raise capital and goes bust. The net result of not having a residential reits is we continue with a rental market dominated by small private landlords and all that crumby private BTL property .

Simply throwing in words like economics does not make it an argument. It is true there was something a bit simple about your original retort and it is a shame you continue on in that vein. If you want to argue like a bar or barrack room lawyer please go somewhere else.

Edited March 19, 2012 by AndyAndy

[porca misèria]

A halfwit in the arms of mortgage broker takes a lot of beating on this front. Are you sure an institutional investor with a 40 year investment horizon will drive prices harder and faster.?

I would buy a house with untaxed money myself. Another poster in this thread has said he'd do likewise. That's rather a high rate already.

Add to people like us every BTL-er in the land suddenly being handed a whopping tax break. And every wealthy parent or grandparent suddenly having the opportunity to help young Rupert and Felicity onto the property ladder using untaxed money: what a gift!

[edit to add] Aha, your reference to institutional investors tells me you didn't see what I was replying to!

Edited March 19, 2012 by porca misèria

[(Blizzard)]

Don't labour and the lib dems support the idea of a residential reit too. In fact didn't labour introduce reit rules for commercial investment in the mid noughties. Surely free market economics requires as its foundation a level playing field for all entrants. Thus if the corporate investor relies in its investors for its capital. It pays tax on its gains at the corporate rate 25% (reducing to 23%). To get the money to the investor it need to then dividend the money to the the investor. Assume 50% a taxpayer, that investor pays tax at a rate of approx 37% on the dividend. So take a hypothetical £100 gain. The corporate investor pays £25 in tax leaving £75 to distribute and distributes that to the investor who pays £27.75 (37% x 75) in tax. The private individual pays CGT at 28% so £28 on £100 gain. By investing in BTL himself the investor is better off by £24.75 on every £100 of gain. The argument works at 40% taxpayer level too. So clearly the investor goes BTL himself , the corporate cannot raise capital and goes bust. The net result is we continue with a rental market dominated by small private landlords and all that crumby private BTL property .

Simply throwing in words like economics does not make it an argument. It is true there was something a bit simple about your original retort and it is a shame you continue on in that vein. If you want to argue like a bar or barrack room lawyer please go somewhere else.

Sigh. I'll try one more time.

1. This Conservative policy reflects on the Conservative party.

2. Landlords claim a service from society they do not pay for. It doesn't matter whether they are big or small, or how the tax system for 'investors' is structured. As long as people get something for nothing, the economy will be inefficient and we are all poorer as a result.

Everything else is a distraction. Landlords need to pay more tax, not less. All of them.

[richc]

Don't labour and the lib dems support the idea of a residential reit too. In fact didn't labour introduce reit rules for commercial investment in the mid noughties. Surely free market economics requires as its foundation a level playing field for all entrants. The corporate investor relies in its investors for its capital. It pays tax on its gains at the corporate rate 25% (reducing to 23%). To get the money to the investor it needs to then dividend the money to the the investor. Assume 50% a taxpayer, that investor pays tax at a rate of approx 37% on the dividend. So take a hypothetical £100 gain. The corporate investor pays £25 in tax leaving £75 to distribute and distributes that to the investor who pays £27.75 (37% x 75) in tax. The private individual pays CGT at 28% so £28 on £100 gain. By investing in BTL himself the investor is better off by £24.75 on every £100 of gain. The argument works at 40% taxpayer level too. So clearly the investor goes BTL himself , the corporate cannot raise capital and goes bust. The net result of not having a residential reits is we continue with a rental market dominated by small private landlords and all that crumby private BTL property .

Simply throwing in words like economics does not make it an argument. It is true there was something a bit simple about your original retort and it is a shame you continue on in that vein. If you want to argue like a bar or barrack room lawyer please go somewhere else.

Why bother trying to reason with tribal Labour trolls?

[(Blizzard)]

Why bother trying to reason with tribal Labour trolls?

Eh?

Edited March 19, 2012 by (Blizzard)

[jonb]

Why should rich landlords be exempt from tax?

It should be a higher rate than working for a living, not less.

They are not exempt from tax.

An amateur landlord pays income tax on rental profits - usually at 40% or 50%, and capital gains tax - 28% on sale of the property.

REITs don't pay tax, but the shareholders pay income tax at the same rates on their share of the profits, and capital gains tax at the same rates on the sale of shares.

A company pays 26% corporation tax on rental profits and capital gains. Then the shareholders pay income tax usually at 32.5% or 42.5% on any dividends they receive, and capital gains tax - 28% on sale of shares.

[jonb]

There was a thread about it last May

http://www.housepric...pic=163790&st=0

There was another one about REITS also paying less stamp duty.

The stamp duty issue was this:

REITs would generally like to buy an entire block of flats, rather than individual properties. If they bought a block of 20 flats for £20m, they would have to pay the top rate of stamp duty on it, whereas individually, the flats at £100k each would be below the stamp duty threshold. Now, when someone buys multiple properties in one transaction or linked transactions, they pay the rate applicable on the average value of the individual properties - again putting them on a level playing field with private landlords.

[Si1]

The stamp duty issue was this:

REITs would generally like to buy an entire block of flats, rather than individual properties. If they bought a block of 20 flats for £20m, they would have to pay the top rate of stamp duty on it, whereas individually, the flats at £100k each would be below the stamp duty threshold. Now, when someone buys multiple properties in one transaction or linked transactions, they pay the rate applicable on the average value of the individual properties - again putting them on a level playing field with private landlords.

this all sounds a good idea - but they have been talking about bringing this in for a few years now - is it actually going to happen any time soon then?