Monday, February 4, 2008

Excellent! BTLeaches will lose out under new CGT rules

Landlords excluded from CGT entrepreneurs’ relief

"effect of increasing the minimum rate on capital gain for those selling a property held for longer than ten years, from 10%, to 18%" “The relief will apply to gains arising on disposals of the whole or part of a trading business (not including a property letting business other than furnished holiday lettings). Large landlords running their operations as a full-time registered business may possibly benefit from the relief but tax experts agree that this is unlikely." Here we go!! are you in for the long term? Then pay a sh*tload of taxes! You are leveraged like hell? Then pay a awesome tax rate (since you have to return the full principal to the bank!) AH HAH... the power of taxation beats "the power of leverage".. BTL = poor [email protected]

Posted by confused76 @ 11:18 AM (1493 views)
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10 thoughts on “Excellent! BTLeaches will lose out under new CGT rules

  • Good.

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  • new user 2007 says:

    This is technically an issue of no change.

    In November the govt announced that tapered relief for all would be removed i.e. from April it would no longer make any difference if you held the property for ten 10 years (the rate fell gradually/ was tapered) or for 1 year. They said at the time that it would be set at 18% regardless of who sold and after how long i.e. those holding assets for a short period would pay less tax more quickly (April instead of upto 40% is selling soon after buying), while those who had held assets for a long time will suddenly see a rise to 18% (previously they would have seen a fall to the 10% (or even lower, not sure).

    This new news is actually that AFTER November they govt did yet another consultation and decided that “entrepeneurs” can still get the reduced 10% tax rate (on the first £1mn) BUT that BTL are not entrepeneurs so are stuck on 18%. The net result is that BTL who bough recently (the bulk of them) will gain from the change, whereas as long term landlords lose out. That is why we have not seen a surge in BTL selling. The bulk bought in the last few years..why pay 40% by selling before April, when they will have to pay just 18% after.

    The good news is that these people are also the most leveraged and so we will see a surge in BTL sellers in a couple of months (assuming that they are not as stupid as even I think they are I.e. that for some reason they may continue to subsidise rents with falling capital values).

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  • crash bandicoot says:

    I think that this is an issue of focus. This is just conjecture because I have no experience in the tax office, but judging from the property porn programs CGT was the least thing on the minds of amateur speculators. I would imagine that this is probably because the IR were not chasing after it too strongly. I take these recent “clarifications” as a sign that they may now be less forgiving. However I am prepared to be corrected if I am wrong.

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  • Well spotted about Sarah Benny Booby or whatever never mentioning CGT. After the CGT change in April I will watch with very eager eyes what happens to BTLers. If they do not rush to sell then I doubt that there will be any sort of major crash. But if I was them then I would sell now just to lock in some profit, in fact I would be marketing it now. as it is completion date that counts.

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  • Mua-ha-ha-ha-ha!!!!!

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  • March/April will be a very interesting time. People looking to sell their BTL properties who have had them for over ten years will be wanting to sell before 31/03 to take advantage of the 10% rate, whilst people who have bought in the last three years will be holding on until 01/04 as the 18% rate will actually benefit many of them. This will be holding back the tide of sales we might have expected to already see given the recent tsunami of negative news about the housing market.

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  • Death and taxes….. MUA HA HA HA HA.

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  • I think I am an entrepeneur, I creat litigation out of nothing!

    How about that ladies and gentleman…?

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  • The CGI tax change actually a tax cut for BTL, who will pay much less total tax than the entrepreneurs.

    Sorry to disappoint you all.

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  • new user 2007 says:

    Mightytharg…

    It is a tax cut for those who bought most recently and want to sell soon but a tax increase for those who bought years ago (they just lost their tapered relief).

    Ah, but wait, why is it a tax cut for any BTL…”they are all in it for the long run”. This means they have all lost the tapered relief so it is a tax increase.

    The type of person who is allededly in it for the long run but thinks they just got a tax cut is precisely the type of idiot that worries me.

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