Press Release Summary: With the budget just weeks away, this is the season for all interested parties to set out their ideas of how and why chancellor Alistair Darling should alter the tax system.
Press Release Body: With the budget just weeks away, this is the season for all interested parties to set out their ideas of how and why chancellor Alistair Darling should alter the tax system. In the case of the UK property market, faced as it is with many challenges, there are a number of areas in which change has been called for.
Today the National Association of Estate Agents (NAEA) set out its own proposals to deal with some of the big issues of the day. Stamp duty, perhaps not surprisingly, topped the list, with proposals to up the one per cent threshold to £200,000 and the two per cent level to £300,000, while placing a 4.5 per cent tax on £2 million-plus properties.
Another proposed change, of greater interest to buy-to-let investors, would be to capital gains tax (CGT). The NAEA wishes to see it cut to make it easier to buy and sell property and thus add \"fluidity\" to the market. Outlining this proposal, NAEA president Stewart Lilly said that in addition to the stamp duty change, \"we would also like to see a revision of capital gains tax for buy-to-let investors who are fast becoming the backbone of the private rental sector\".
One change to CGT which has already been confirmed as a budget measure is sure to help some investors already, MSN Money stated this week. This concerns the time link to the level of tax an investor pays when they sell on a property, which will no longer start at 40 per cent for the first three years of ownership and drop by two per cent a year thereafter to a 24 per cent level after ten years. This change will help those who have owned a property for just a short period of time and who will now not be at a disadvantage by paying more tax than the sellers of property that has not changed hands for many years. Therefore some fluidity may be coming anyway.
The other tax change Mr Lilly called for concerned the issue of making homes greener. Keen to see more done about existing homes, he suggested making devices that improve home energy efficiency VAT-free, saying this \"can only encourage people to introduce more energy efficiency into their existing homes\". Far better, he argued, than policies put forward so far such as home information packs and zero-carbon homes, measures he described as \"measures with big words and little substance\".
A VAT change of this kind could also be of interest to buy-to-let landlords, if they too are able to get an exemption for any such changes they make to their properties. By doing so, they could lower energy bills for their tenants and be able to attract people keen to live in eco-friendly homes.
The prospects of such a measure may be promising. This week a spokesperson for the Department for Business, Enterprise and Regulatory Reform said that on current projections applications for grants to get microgeneration devices (such as solar panels and wind turbines) fitted to homes was on course to undershoot its target this year.
She added that in response to this, the department was considering its options, concluding: \"We recently met with industry representatives to discuss options for encouraging uptake and are considering options before deciding on next steps.\"
Could we be in line to see a situation where stamp duty thresholds are raised, CGT cut and eco-friendly devices incentivised more? Such moves may not happen, unless other taxes are raised to replace the revenue. But only when Mr Darling sits down at the end of his speech on March 12th will property investors know for sure.
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