Tuesday, Aug 24, 2010
VI "Quarterly landlord sentiment survey"
FT: CGT rise drives landlords from BTL market
Just 42 per cent of landlords think now is a good time to invest, dropping from 48 per cent three months ago, data from the quarterly landlord sentiment survey by LSL Property Services has shown. The introduction of a higher capital gains tax (CGT) is a driving factor behind this, LSL claimed.
Posted by jack c @ 10:47 AM (1469 views) Add Comment
15 Comments
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1. mark said...
its only a tax, if they make a good profit then pay the tax, whats the problem?
2. sibley's love child said...
But, but, who will then provide their invaluable service to the poor people?
As an aside, I abhor the term 'portfolio' in the context of BTL.
3. inbreda said...
not as much as I abhor the term "entrepreneur" in the context of BTL
4. timmy t said...
What a crock - the prospect of a capital loss is the driving factor, not the fact that any gain will be taxed.
5. mander said...
Some experts have predicted rates increases up to 14% . If I would be a BTL and have a portfolio I would have sold it by now. If house prices do not go up there is no future for BTL forget CGT as this applies only if house prices go up.
6. Crunchy said...
2. sibley's love child said...'As an aside, I abhor the term 'portfolio' in the context of BTL.'
Does portfollio make any difference.
7. mark wadsworth said...
Indeed, as Mark says, if you make a profit, why whine about the tax? I sold my BTLs for a handsome windfall profit and was perfectly happy to pay the CGT (it was still at a far lower rate than e.g. my employment income).
Ultimately, the CGT has got nothing to do with it, wether you pay 18% or 28% is nigh irrelevant - you still end up with a profit - and while the tax may deter new investors from buying, it will deter existing investors from selling, so the whole things nets off to very little either way.
8. uncle tom said...
MW,
As you doubtless have a copy of Tolleys to hand, can you remind us as to whether the new CGT rules allow landlords to discount inflation from their CGT liability?
Being taxed on profit isn't so painless if that profit was derived from treading water against inflation..
9. righttoleech said...
The indexation has gone Uncle Tom
10. mark wadsworth said...
UT, indexation for individuals went out of the window in 2008*. But as long run property price gains are vastly in excess of inflation, that's not really an issue. Which is partly why the top rate of CGT is 28% and not 40% or 50%.
* In fact, it was frozen in 1998, but still applied to captial gains realised 1998 - 2008.
11. sibley's love child said...
@ 6
Not particularly Crunchy; after all, it's simply etymology. When I hear the word portfolio in connexion with BTL it calls to mind someone amassing shiny trinkets without the conception of its negative implications. Anyway, must dash and check on my portfolio of children's tears.
12. uncle tom said...
"But as long run property price gains are vastly in excess of inflation, that's not really an issue."
Have been..
..but won't be..
13. mark wadsworth said...
UT, there's a tricky trade off between indexation allowance and a higher tax rate or no indexation and a lower tax rate.
If you bought in the last 5 years, you might have a small paper profit but a small real loss - but there is also the £10,000 annual exempt amount to deduct from the taxable gain. In any event, how is this worse than taxing interest income at 20% or 40%, with no allowance for inflation?
If you bought more than 10 years ago, you are laughing either way.
If you bought 5 to 10 years ago, then the lack of indexation allowance more or less nets off with the lower tax rate.
But aren't BTLers supposed to be businessmen who trade off risks and rewards? One of those risks is that CGT becomes less favourable.
14. Crunchy said...
11.
That would be a portflowlio, so Jamie tells me.
The word homeflowlio is my favourite of the day.
15. mark said...
MW you just hit the nail on the head with "But aren't BTLers supposed to be businessmen who trade off risks and rewards?" a good proportion of them are not, they are just the fools who got carried away with the TV on how to wreck a house with purple and yellow walls, how to make money from drug dealers renting a house from you... Their pain will be soon...lol