The Chancellor, George Osborne’s has taken a step towards levelling the playing field for UK property investors after deciding to introduce Capital Gains Tax (CGT) for international property investors, a move that has attracted a mixed response from property professionals.
While UK property investors have broadly welcomed the new tax for international property investors, some industry professionals have slammed the Chancellors decision to introduce it, with some pundits speculating that it could drive foreign investors away, increase housing supply and push property prices down.From April 2015, 28% UK Capital Gains Tax will be imposed on the profit made by international property investors when they sell their UK properties, providing it is not their primary residence.
The decision to impose Capital Gains Tax on wealthy international property investors brings foreign investors in line with the same taxation rules imposed on UK property investors, if we own multiple properties, we have to pay tax if we decide to sell any that are not the primary residence, that is the way it is, why should there be one rule for one and something different for others.
The introduction of the tax on foreign property investors could result in more opportunities to purchase properties by overseas investors desperate to beat the 2015 deadline in prime locations around the UK.
Gary Hersham, Managing Director of Beauchamp Estates, thinks the decision to tax foreign property investors should only have a marginal impact on the demand and pricing of UK properties and anticipates that GCT initiative will trigger the release of some good quality stock into the marketplace, particularly in London. He said, “There are several houses owned by non-domiciles in PCL which may have well been left empty for long periods of time, appreciating in value that could come onto the market before the 2015 deadline.”
Nilesh Shah, Senior Tax Partner at Blick Rothenberg Chartered Accountants LLP, said, “London property prices may fall if non-UK residents take advantage of their 15 month window to sell their UK property before having to pay Capital Gains Tax.”
Phil Nicklin, real estate tax partner at Deloitte, said that “Overseas investors will now pay their fair share of tax, after being placed on a level playing field with UK investors. This is an extension of last year’s rules for residential property owned by overseas companies and other ‘non-natural’ persons, but now it’s not just limited to properties valued at over £2 Million (GBP).”
Nick Leeming, Chairman of estate agents Jackson-Stops & Staff, concurred, “It will probably raise less than £100 million for the Treasury, and will send out a negative message to international investors.”
To keep up to date with all UK tax requirements for property investment purposes visit our tax bookshop
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