| New Capital Gains Tax rules could save you thousands |
|
|
|
| Written by Presswire.com | |
| Tuesday, 01 April 2008 | |
 The current rate is set at 40% for higher rate tax payers who have owned their property for less than three years. Even after a 10-year ownership of a property, the most a higher rate tax payer could hope for is a fall to a minimum of 24%. The new rate is welcomed by property investors and will make owning property personally advantageous for many discerning owners. Robert Fraser, Managing Director of Fraser & Co. (www.fraser.uk.com), a central London-based estate agent with a global reputation, stated: “This additional available cash injection could potentially deliver a much needed lift to the spring property market with an increase in generated sales.” Alongside the change in rates, there is also a change in the indexation rule. Indexation was an inflation adjustment to the original purchase price and enhancement costs incurred up until 5th April 2008 which may result in the cost increasing thereby reducing the taxable gain. A change in indexation relief will also have an impact on those who have owned the property for a long time. It is still necessary to take into account the effect of double tax relief. A higher rate tax payer who bought five years ago for an average price of £123,000 and sells now for £200,000 could face a potential Capital Gains Tax bill of £22,500. If they sell after April 5 this year, their tax bill would potentially fall to £12,204, which is a saving of £10,296, assuming they sold the property for the same amount. This reduced tax liability could have a positive effect on the property market as those with extra capital to invest would be more inclined to do so with the introduction of this new rate. Fraser & Co. who have extensive experience in new developments in inner London are anticipating a huge rise in investors looking specifically at new build schemes. The new rules on capital gains tax and the indexation rule are very different to those made previously; therefore please consult your professional adviser or accountant before taking any steps.
Related Items:
                             |
