Will Higher CGT Rates Crush Property Investment?

CGT is a tax on inflation.

The country is broke. Labour should raid ISA accounts or, at least, set a lifetime limit of £250k per person.

Another reason to incorporate, CGT doesn’t apply at that rate.

Reply to the comment left by Cider Drinker at 15/08/2024 - 10:40"Labour should raid ISA accounts or, at least, set a lifetime limit of £250k per person."

Lefty thinking without thought of the consequences. The politics of envy.

Should rates be equalised without any taper or indexation, the contrast between someone owning a residential investment property and someone investing in REITs (Real Estate Investment Trusts) will be truly bizarre.

Individuals investing in property company shares or REITs would be able to place £20,000 in an ISA each year and enjoy tax free dividends and no CGT with no upper limit.

Investing in your own rental property would attract no yearly tax free allowance (and under current rules only a one off pathetic £3,000 allowance in the year of sale). Not only that, the gain will most likely be added to income (catching out those who cannot deduct mortgage interest from rent under S24) meaning that a significant gain on top of other earned/pension/rental income would easily put a slice in 45p tax AND result in loss of the income tax personal allowance in the year of the disposal - with no regard to the fact the gain will have gradually accrued in years where the individual may have had earnings well within the basic tax band or possibly even made a loss if their trading business performed badly.

You can see why some tightening is needed to stop the situation where very short term gains are taxed at 20% year in year out leading to a strong suspicion they are really income - but the implications for long term property are truly horrendous.

And a situation where you can’t shelter your personally held bricks and mortar over the time it is held (and end up possibly losing 50%+ when the distortion of S24 pushing the gain into top tax and loss of personal allowance is considered) but could shelter hundreds of thousands of pounds completely free of tax in property shares over the same period, would surely be too imbecilic for any politician?

(I’m virtually out of bricks and mortar and using my maximum ISA allowance each year).

Reply to the comment left by Monty Bodkin at 15/08/2024 - 11:52
Money invested in S&S or cash ISAs should have a lifetime limit. I think £250k per person would be reasonable.

Alternatively, allow me to hold £250k of investment property in Income Tax-free and CGT-free ISAs.

Reply to the comment left by Cider Drinker at 15/08/2024 - 17:33Politics of envy.

Because you are taxed unfairly then so should everyone else.

Deterring people to save and invest is ideological (and bl@@dy stupid).

I'm presumably in a similar situation to yourself as this is a property forum. I'm not an ISA millionaire but if someone has saved £1M + in ISA's out of already taxed income then good luck to them.

Reply to the comment left by Cider Drinker at 15/08/2024 - 17:33
"Money invested in S&S or cash ISAs should have a lifetime limit. I think £250k per person would be reasonable."

Even in your odd Lefty world, why the feck do you think a limit of £250,000 of after tax income is "reasonable" when the lifetime pension limit (probably with a 45% state contribution) is £1,073,100?

Genuinely bewildered.

Reply to the comment left by Jason at 15/08/2024 - 11:37
Yet!