How Osborne Could Kill Btl

[Neverwhere]

The Daily Mail has previously shown eerie pre-cognitive abilities on things about to be announced. This would be too good to be true. 24th of November is going to be like the night before Christmas. Better check on stock levels of cake and fine wines that I use to self-medicate my over-gloating.

That's worked really well for you in the past.

[jiltedjen]

Yeah the daily mail certainly does seem to be very accurate with its pre statement articles, also sadly looks like might be a reduction of stamp duty at the higher levels of the London market.

But going after capital gains will certainly cause a lot of brown trousers for the BTL mew brigade.

Buy to let has been running away, every day owner occupiers are being outbid by these loons. conservatives want owner occupiers. Buy to let has to be put to the sword brutally quickly and violently to have any effect with the kind of punters to get into buy to let.

this time around he won't hide it away, it will be a main policy.

[Neverwhere]

Hmm. There were some suggestions that the CGT exemption for main homes would be removed at some point. I wonder if we will see this during the course of this government?

I expect CGT relief on incorporation to go first. I can't see CGT on main homes going down well while that is still available.

Edited November 22, 2015 by Neverwhere

[Si1]

Not wishing to sound like a Hollywood film quote, I cannot help feel something is going down :-)

Apart from the obvious worry you can see on 118 now, the hard line property rampers on Motley Fool and MSE have gone very quite indeed.

As had we following the 2015 election. It looked then like the bulls had won. I caution against both undue pessimism as well as undue optimism.

[Neverwhere]

Yep. Totally agree. Found the article that was suggesting CGT on main homes will be brought in at some point; http://www.telegraph.co.uk/finance/personalfinance/capital-gains-tax/11637842/Capital-gains-tax-on-homes-its-only-a-matter-of-time.html

Dyson seems to be suggesting removing CGT relief only for the most expensive properties, like a Conservative mansion-tax-substitute, which would certainly be interesting. Then again given his recent articles on BTL I don't think he exactly has the ear of the party.

[Neverwhere]

No juicy removal of CGT entrepeneurs' relief for rental properties in the spending review and autumn statement 2015, but this looks potentially interesting!

Capital Gains Tax entrepreneurs’ relief: contrived structures – The government will consider bringing forward legislation to amend the changes made by Finance Act 2015 to entrepreneurs’ relief, in order to support businesses by ensuring that the relief is available on certain genuine commercial transactions.

[Bland Unsight]

The market heard this one OK...

[Neverwhere]

It seems like it's also worth flagging this from the spending review and autumn statement 2015 here as it's clearly relevant:

Capital Gains Tax (CGT) due on residential property is currently paid between 10 and 22 months after a disposal is made. This is out of step with the position for other taxpayers, such as those paying income tax through the Pay As You Earn (PAYE) system. This delay can also cause problems where a taxpayer forgets to pay, or where they no longer have enough of the proceeds from the disposal to cover the tax charge. To address this the Spending Review and Autumn Statement introduces a requirement for the capital gains tax due to be paid within 30 days of completion of any disposal of residential property. This requirement will be introduced from April 2019 to ensure that HMRC’s digital systems are ready to provide support, making paying this tax simpler and quicker for taxpayers.

Possibly once the payment goes digital they might start considering requiring a CGT holding deposit be made on mortgage equity withdrawal, or similar.

[interestrateripoff]

Our buy-to-let dreams are in ruins! Huge stamp duty rises for rental properties and second homes are set to kill off booming market and scupper plans of would-be landlords

In a £4billion tax raid, buyers of holiday homes or rental properties face punitive tax bands. Barbara Robbins and her husband William (pictured) said their retirement plans 'could now be scuppered'. The couple, who live in a £400,000 home in the Cotswolds, hoped to use their current property and a pension release from Mr Robbins' job as an aerospace engineer at Rolls Royce to buy a retirement home. Mrs Robbins said: 'We'll have to think again. It's a terrifying amount of money - a big increase.' If the pair were to buy a £400,000 home and a separate £200,000 buy-to-let property, they would currently pay £1,500 in stamp duty on the second property - but £7,500 from April.

Today's Mail headline.

[MississippiJohnHurt]

Our buy-to-let dreams are in ruins! Huge stamp duty rises for rental properties and second homes are set to kill off booming market and scupper plans of would-be landlords

In a £4billion tax raid, buyers of holiday homes or rental properties face punitive tax bands. Barbara Robbins and her husband William (pictured) said their retirement plans 'could now be scuppered'. The couple, who live in a £400,000 home in the Cotswolds, hoped to use their current property and a pension release from Mr Robbins' job as an aerospace engineer at Rolls Royce to buy a retirement home. Mrs Robbins said: 'We'll have to think again. It's a terrifying amount of money - a big increase.' If the pair were to buy a £400,000 home and a separate £200,000 buy-to-let property, they would currently pay £1,500 in stamp duty on the second property - but £7,500 from April.

Today's Mail headline.

So their retirement plans, which already include a final salary pension and a (presumably) fully paid house, are "ruined" because they cant additionally buy a BTL and become full-spec rentiers?

Bring me my tiny violin

[Neverwhere]

Landlords should be able to claim the new 3% SDLT paid on the purchase of additional residential properties above £40k as an expense when calculating CGT when they come to sell the property later down the line (h/t to SarahBell for pointing this out on the Another Nail in the BTL Coffin thread), and so it could be that one of the intended functions of this tax is to effectively bring forward some small part of a landlord's CGT payments to the point of purchase? Maybe all that whining about unpayable CGT bills had some effect after all.

The more I think about it the more I like this change. It's really quite elegant.

Edit: corrected for inaccuracy.

Edited November 26, 2015 by Neverwhere

[Guest_growlers_*]

Landlords should be able to offset the new 3% SDLT paid on the purchase of additional residential properties above £40k against CGT when they come to sell the property later down the line (h/t to SarahBell for pointing this out on the Another Nail in the BTL Coffin thread), and so it could be that one of the intended functions of this tax is to effectively bring forward landlord CGT payments to the point of purchase? Maybe all that whining about unpayable CGT bills had some effect after all.

The more I think about it the more I like this change. It's really quite elegant.

Ok but that only saves them 28% of the stamp duty.

[CunningPlan]

Landlords should be able to offset the new 3% SDLT paid on the purchase of additional residential properties above £40k against CGT when they come to sell the property later down the line (h/t to SarahBell for pointing this out on the Another Nail in the BTL Coffin thread), and so it could be that one of the intended functions of this tax is to effectively bring forward landlord CGT payments to the point of purchase? Maybe all that whining about unpayable CGT bills had some effect after all.

The more I think about it the more I like this change. It's really quite elegant.

To an extent. They can use the SDLT to reduce their gain, not offset it agains the tax. So 10k extra SDLT will only save them £1,800 of CGT down the line.

I would still like to see CGT paid on account whenever a mortgage revaluation is undertaken. That would make life very interesting. As I see it, currently you are rolling up a gain to a time when you want to use it, and if you MEW you are in effect borrowing money off HMRC.for your own use that they rightly should get in CGT. Can't really see any decent argument against this method of charging.

[Neverwhere]

Ok but that only saves them 28% of the stamp duty.

To an extent. They can use the SDLT to reduce their gain, not offset it agains the tax. So 10k extra SDLT will only save them £1,800 of CGT down the line.

I would still like to see CGT paid on account whenever a mortgage revaluation is undertaken. That would make life very interesting. As I see it, currently you are rolling up a gain to a time when you want to use it, and if you MEW you are in effect borrowing money off HMRC.for your own use that they rightly should get in CGT. Can't really see any decent argument against this method of charging.

Even better! My apologies for getting that detail wrong, I'll go back and edit my earlier post.

[CunningPlan]

Even better! My apologies for getting that detail wrong, I'll go back and edit my earlier post.

Both were correct - it depends on your tax rate.

[CunningPlan]

Both were correct - it depends on your tax rate.

But thinking about it - since the interest deduction change means most are now higher rate tax payers they will get hit for 28% CGT if they sell. That really was a beautiful move that just keeps on giving!

[Neverwhere]

But thinking about it - since the interest deduction change means most are now higher rate tax payers they will get hit for 28% CGT if they sell. That really was a beautiful move that just keeps on giving!

Absolutely, it was a brilliant move!

Given that I was wrong that the new SDLT charge might bring forward the majority of CGT payable, where HPI is not too excessive, maybe we will get something more on CGT in the next Budget. It would certainly be very interesting if they looked at the relationship between MEW and CGT a little more closely, as you suggest.

[Bland Unsight]

Ros at Poverty118Later claiming some responsibility for this article:

Buy-to-let offered hope amid plunging savings rates and volatile stock markets but now it looks set to die a slow death.

Source: Evening Standard, Chancellor stamps down on buy-to-let landlords, 29 November 2015

With Ros on our side, how can we fail? With the Poverty11Later mugs and hpcers working in concert to keep the negative message going in the BTLegrpah comments sections, surely the time of our victory is at hand!

That quote from the Standard could be loosely translated as "Mugs discover beans sold to them by bankers as magic beans turn out to be actually just beans"

[Neverwhere]

Ros at Poverty118Later claiming some responsibility for this article:

Buy-to-let offered hope amid plunging savings rates and volatile stock markets but now it looks set to die a slow death.

Source: Evening Standard, Chancellor stamps down on buy-to-let landlords, 29 November 2015

With Ros on our side, how can we fail? With the Poverty11Later mugs and hpcers working in concert to keep the negative message going in the BTLegrpah comments sections, surely the time of our victory is at hand!

That quote from the Standard could be loosely translated as "Mugs discover beans sold to them by bankers as magic beans turn out to be actually just beans"

The line above it is as ridiculous:

Ordinary savers are the ones hurting most today, as they see yet another door slammed in their faces.

In what way is spending money hoarding residential property with interest only finance saving, let alone ordinary saving?

Subprime borrowers would be a more apt description.

[Venger]

Got to admit, reading this makes me happy.

Harris says a first-time buyer purchasing a £250,000 property will pay £2,500 in stamp duty from April but a landlord will pay a whopping £10,000. On a £300,000 property the buy-to-let stamp duty bill will soar from £5,000 to £14,000.

http://www.express.co.uk/finance/personalfinance/622851/Chancellor-stamps-down-on-buy-to-let-landlords

And from Lana 'HTB is a Good Idea' Clements, again in Express.

The Chancellor shocked amateur landlords and second home owners by raising their stamp duty tax rates in little more than four months. It means people searching for a source of stable income who want to buy a £200,000 home will be forced to pay a huge £7,500 in tax costs compared to £1,500 today.

http://www.express.co.uk/finance/personalfinance/622002/Autumn-Statement-2015-George-Osborne-Buy-To-Let-tax-raid

Searchhhhh.

[Venger]

But thinking about it - since the interest deduction change means most are now higher rate tax payers they will get hit for 28% CGT if they sell. That really was a beautiful move that just keeps on giving!

Hehe. Yeahh.

[spyguy]

The line above it is as ridiculous:

In what way is spending money hoarding residential property with interest only finance saving, let alone ordinary saving?

Subprime borrowers would be a more apt description.

Make that 'leveraging up debt to hoard real estate'.

If stock markets are volatile and saving rates low what makes her think that property prices will be immune volatility and rent returns low?

[spyguy]

Ros at Poverty118Later claiming some responsibility for this article:

Source: Evening Standard, Chancellor stamps down on buy-to-let landlords, 29 November 2015

With Ros on our side, how can we fail? With the Poverty11Later mugs and hpcers working in concert to keep the negative message going in the BTLegrpah comments sections, surely the time of our victory is at hand!

That quote from the Standard could be loosely translated as "Mugs discover beans sold to them by bankers as magic beans turn out to be actually just beans pebbles with some paint on"

[spyguy]

Good article and he's right in the sense that everything boils down to price. Too many ifs and buts though, unsupported with raw data. For example, you'd need to know not only the percentage of BTL landlords to the whole market, but also how many are leveraged and buy how much. You'd then need to calculate the effect of tax changes on returns etc. I don't know what percentage of properties are insutitutional investors and or cash buyers, but if the causes of the last bubble are any indication, I don't think tax changes affecting BTL investors will be the catalyst that pricks the bubble. It's going to be something that will effect the market as a whole such as unsustainable prices, a recession, higher rates etc. That looks very much on the cards at some point.

Everything boils down to getting extra tax revenue.

GO is not doing this because he wants to kick BTLers. He's doing it as BTL do no generate much tax compared to OOO *and* its causing social problems *and* some people in the BoE who watch debt levels and bank lending are probably going 'WTF are banks lending so much money to so few people with so little income'

[mrtickle]

From the Express article, the toad Ray Boulger in "good advice" shocker:

Ray Boulger, senior technical director at brokers John Charcol, warns investors against getting swept away by the “rush to buy” over the next four months. Buy-to-let currently accounts for 15% of all property sales, and house prices could fall if investors now quit the market.

“Price falls after April could wipe out the 3% savings you make if you buy before the new surcharge, so be careful,” says Boulger Buy-to-let investors should brace themselves for further misery with the Chancellor also announcing that from 2019 when they sell their properties they will have to pay any capital gains tax due within just 30 days.