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Capital gains tax rise hits buy-to-let

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    Capital gains tax rise hits buy-to-let

    Capital gains tax will rise under the new Tory Lib-Dem Government with property investors fearing the worst.

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    Just a few short years after the flat rate of 18% capital gains tax was introduced, it will be going up again.

    The parties say this will help pay for raising the income tax threshold and have been keen to stress that increases will be for non-business assets and allowances made for entrepreneurs.

    This spells bad news for investors and buy-to-let landlords, who are likely to now pay CGT at a rate similar to their income tax level.

    Everyone has an annual CGT-free allowance, currently £10,100 per year, beyond this gains on second homes, shares and other investments see the tax charged at 18%. (AtW's comment: should have been 110% on speculative assets)

    It is likely this will now change, with individual CGT rates brought back into line with income tax – as was previously the case.

    Due to the nature of not being able to sell chunks of properties over a period of time in order to minimise CGT, property investors are hit hard by the tax.

    Depending on whether changes are brought in immediately, which is unlikely, or from April 2011, a rise in CGT could prompt a rush of buy-to-let investors selling up to avoid seeing their tax bill double.

    Whether taper relief will be brought back in, which cut the tax burden of assets held for the long-term remains to be seen.

    The National Landlords Association called for buy-to-let investors to be considered as entrepreneurs and exempted from higher taxes.

    More: Capital gains tax rise hits buy-to-let investors | This is Money

    #2
    Good spot AtW.

    I need to go and rework out my BTL model.
    What happens in General, stays in General.
    You know what they say about assumptions!

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