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Reduction in Mansion tax threshold could cost BTL investors thousands

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Telegraph: The hidden 'mansion tax' that could cost buy-to-let investors thousands


What was once known as a tax only affecting the very wealthy could now catch out everyday landlords thanks to changes in its implementation and soaring house prices.

The tax is technically known as "annual tax on enveloped dwellings" (or ATED) and it was initially introduced to prevent wealth homebuyers setting up companies to buy properties in order to avoid duties.

But now a reduction in the point at which the tax kicks in could leave buy-to-let investors  - who increasingly buy properties through companies - with thousands of pounds in fines. This situation could arise even where the properties in question are fairly modest.

The tax, which is paid annually, initially applied only to houses worth more than £2m when it was first introduced in 2012. However, as of April last year it applies to all properties worth more than £500,000 - meaning it's likely to hit many investors in the south of England.

While there is an exemption for properties which are rented out privately, the owner must still file a return and risks being fined if they fail to do so.

I wasn't aware the threshold is reduced to £500,000

Edited by Fairyland

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  • 295 Brexit, House prices and Summer 2020

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      • down 5% +
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