CGT on primary property
Discussion
There's been much fevered speculation that RR will introduce CGT on people's primary property above a certain threshold (aka the 'mansion' tax that hits normal family homes in the South...)
What's being forgotten is that in most cases, people have paid for these homes with interest bearing mortgages paid for out of already taxed income (now there is no MIRAS - remember that?)
So surely the true capital gain should have to take into account interest charges paid on these mortgages for the relevant years as well as any other property expenses such as insurance. maintenance etc? Most other capital gains offset expenses before calculating the true gain to be taxed after all.
Otherwise, if you are to be taxed on the full capital gain of your house while paying interest on a mortgage, it massively reduces the financial basis for buying a house rather than renting.
As well as the rather obvious point that it would largely freeze the upper end of the property market until after the next election considering how badly Labour are doing in the polls. if you factor in all the people who currently have a potential capital gain and those who might hope to over the next few years, that's a lot of lost votes.
What's being forgotten is that in most cases, people have paid for these homes with interest bearing mortgages paid for out of already taxed income (now there is no MIRAS - remember that?)
So surely the true capital gain should have to take into account interest charges paid on these mortgages for the relevant years as well as any other property expenses such as insurance. maintenance etc? Most other capital gains offset expenses before calculating the true gain to be taxed after all.
Otherwise, if you are to be taxed on the full capital gain of your house while paying interest on a mortgage, it massively reduces the financial basis for buying a house rather than renting.
As well as the rather obvious point that it would largely freeze the upper end of the property market until after the next election considering how badly Labour are doing in the polls. if you factor in all the people who currently have a potential capital gain and those who might hope to over the next few years, that's a lot of lost votes.
Agree that maintenance and upgrade's and renovation changes etc would all need inputting into the number prior to seeing what gains there are but this is probably one of the least likely changes she will make / introduce.
Rachel needs to raise money instantly with her tax takes so bringing in something that would see no gains until people move is like freezing allowances further beyond 2027 etc.
Practically speaking not sure if people keep receipts etc of everything they spend so imagine just even trying to work out the principles of such an introduction will be itself be too difficult for them.
Far more likely to see some form of Council Tax surcharges start.
Rachel needs to raise money instantly with her tax takes so bringing in something that would see no gains until people move is like freezing allowances further beyond 2027 etc.
Practically speaking not sure if people keep receipts etc of everything they spend so imagine just even trying to work out the principles of such an introduction will be itself be too difficult for them.
Far more likely to see some form of Council Tax surcharges start.
Origami said:
it massively reduces the financial basis for buying a house rather than renting.
Bingo - that's what they want to happen - https://en.wikipedia.org/wiki/You%27ll_own_nothing...Origami said:
There's been much fevered speculation that RR will introduce CGT on people's primary property above a certain threshold (aka the 'mansion' tax that hits normal family homes in the South...)
What's being forgotten is that in most cases, people have paid for these homes with interest bearing mortgages paid for out of already taxed income (now there is no MIRAS - remember that?)
So surely the true capital gain should have to take into account interest charges paid on these mortgages for the relevant years as well as any other property expenses such as insurance. maintenance etc? Most other capital gains offset expenses before calculating the true gain to be taxed after all.
Otherwise, if you are to be taxed on the full capital gain of your house while paying interest on a mortgage, it massively reduces the financial basis for buying a house rather than renting.
As well as the rather obvious point that it would largely freeze the upper end of the property market until after the next election considering how badly Labour are doing in the polls. if you factor in all the people who currently have a potential capital gain and those who might hope to over the next few years, that's a lot of lost votes.
With existing cgt on property you can only offset purchase and sale fees (solicitors, agents, stamp duty) plus major changes such as an extension. It applies today on second homes / holiday lets / let properties etc.What's being forgotten is that in most cases, people have paid for these homes with interest bearing mortgages paid for out of already taxed income (now there is no MIRAS - remember that?)
So surely the true capital gain should have to take into account interest charges paid on these mortgages for the relevant years as well as any other property expenses such as insurance. maintenance etc? Most other capital gains offset expenses before calculating the true gain to be taxed after all.
Otherwise, if you are to be taxed on the full capital gain of your house while paying interest on a mortgage, it massively reduces the financial basis for buying a house rather than renting.
As well as the rather obvious point that it would largely freeze the upper end of the property market until after the next election considering how badly Labour are doing in the polls. if you factor in all the people who currently have a potential capital gain and those who might hope to over the next few years, that's a lot of lost votes.
Refurbishment, new kitchens, bathrooms, carpets, decorating, a degree of interest costs come off operating income / profits.
I’m not sure how they will apply it where operating income isn’t relevant.
Origami said:
As well as the rather obvious point that it would largely freeze the upper end of the property market until after the next election...
The irony is that due to all the speculation the property market IS now frozen and it is all due to press scaremongering and Rachael from Accounts has not uttered even a single word on the subject although I don't doubt that something grim and unfair is on the way.Similar happed on pensions before the previous election and the reality although grim was quite different from the then speculation but now we are expecting the Chancellor to have a second bite at that.
Hopefully there will be a pre-budget announcement to tell everyone what will NOT happen but I doubt it.
vindaloo79 said:
In addition to interest paid the damage of inflation really means that the gains are probably barely above the real cost to date.
Investments in gold have massively outpaced the gains in house price over the last 8 years for us.
Better hope that she doesn't think about getting rid of the exemption on Gold coins too assuming that's where you have invested ?!Investments in gold have massively outpaced the gains in house price over the last 8 years for us.
Ducati996R said:
Unfortunately for all home owners is that this government don’t care about us ….they view anyone who has worked hard for themselves and or their family as the enemy and ripe for the plucking ..
The government made much of being 'for working people' but when questioned were unable to say what a working person was. I think they have an image of pre-war factory workers on 3/- a day.I think there are real risks here.
There are a significant number of high LTV mortgages.
Many people are already saying house prices have dropped, a lot of people could be heading for negative equity if the gov't does anything further to damage the housing market.
That's going to lead to a lot of belt tightening.
Putting more tax on middle earners is likely to damage retail, hospitality and that will impact lower earners.
CGT will make the market even less liquid. People will stay put rather than sell. Do equity release rather than downsize.
There are a significant number of high LTV mortgages.
Many people are already saying house prices have dropped, a lot of people could be heading for negative equity if the gov't does anything further to damage the housing market.
That's going to lead to a lot of belt tightening.
Putting more tax on middle earners is likely to damage retail, hospitality and that will impact lower earners.
CGT will make the market even less liquid. People will stay put rather than sell. Do equity release rather than downsize.
So having just spent £10k+VAT on planning fees including a big chunk to the Council as the house is listed, what is the point in me spending £150k on fixing up my house to increase its value just to be taxed to buggery when we come to sell it having already been taxed on the money earned to buy it, and paid stamp duty?
That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
ClaphamGT3 said:
Suspect that this will take the form of a council tax surcharge as they need the money now
The suggested proposed changes were fairly neutral for me in band G, assuming they were as read… assume it was largely to be ‘fair’ while also rebalancing all the Westminster and central London stuff on peanuts council tax given multi million quid values.If they stacked on top, not as read, I’d need £8,000 more a year in earnings just to cover.
Which then basically sinks my discretionary spending to near zero and/or causes major rejig to finances.
I can’t see it happening in any meaningful sense anywhere now.
Any extra taxes are basically economic inverse multipliers, especially when the revenues aren’t spent on anything that is an economic multiplier (ie, net zero is a further economic inverse multiplier)
They want their cake and to eat it.
They had a bit of a free pass last budget, but this autumn markets and bond markets are already saying to tread carefully.
I see the wheels falling off.
Iain0140 said:
So having just spent £10k+VAT on planning fees including a big chunk to the Council as the house is listed, what is the point in me spending £150k on fixing up my house to increase its value just to be taxed to buggery when we come to sell it having already been taxed on the money earned to buy it, and paid stamp duty?
That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
The point is that you pay (others) to fix up your house to enjoy it. Not to make unearned money on it.That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
ClaphamGT3 said:
Suspect that this will take the form of a council tax surcharge as they need the money now
That's by far the most likely outcome IMO. An immediate hike that kicks in on 5 April 2026 so the cash starts arriving from your May 2026 direct debits. Just a few months for councils to prepare rough and ready charts of who gets hit and leave any mess to be cleared up afterwards.Inevitably the effect will be an additional "South of England" tax they can spend paying benefits further north. Like Stamp Duty and CGT.
Peterpetrole said:
Iain0140 said:
So having just spent £10k+VAT on planning fees including a big chunk to the Council as the house is listed, what is the point in me spending £150k on fixing up my house to increase its value just to be taxed to buggery when we come to sell it having already been taxed on the money earned to buy it, and paid stamp duty?
That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
The point is that you pay (others) to fix up your house to enjoy it. Not to make unearned money on it.That £150k includes VAT to the treasury, pays a local builder, plumber, architect, roofer, small local timber framing business and window firm....so a large number of people miss out on jobs and the government miss out on all the associated VAT and tax from the businesses.
But I am now obviously the enemy
If you spend £150k moving it from X to Y then as things stand the government appears to be planning to charge a % of the value increase that occurs even if the expenditure was equal to or more than the uplift.
This will mark a significant downturn in house refurbishment - not the best time to be in the building trades.
Im just glad we flipped 3 principle houses back to back, providing us with family accommodation and circa £600k capital growth before this bunch got in.
I can see people demonstrating in the streets soon shouting ‘bring back the poll tax’ 
This governments clearly not got a clue what they are doing. Worse government in the history of governments. I think it’s a case of hang on for the next 3yrs and see what reform can do once they get in.
This governments clearly not got a clue what they are doing. Worse government in the history of governments. I think it’s a case of hang on for the next 3yrs and see what reform can do once they get in.
Granadier said:
Is there a 'time limit' on CGT? e.g. my parents bought their house in 1971 for £7,000 and sell it now for £900,000. Would they be liable to CGT on £893,000?
No. but they would each get about £3k of allowance, so they'd get £6k combined allowance they'd not need to pay the GCT tax on.As already posted below the impact of inflation is significant over time, executed badly this has the potential to fully trash the UK property market and way beyond.
To be clear, house prices have continued to inflate by design and helped by Govt policies. It makes the owners of houses feel wealthy, they borrow and spend more and it keeps the economy going.
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