Buy-to-let investors are unfairly competing against first-time buyers in the housing market thanks to generous tax treatment, according to a new report.
Think tank Intergenerational Foundation says in its report – Why BTL equals “Big Tax Let-Off” – that private landlords have tax advantages, and are exploiting loopholes in Capital Gains Tax.
The think tank, which says it exists to protect young generations in future policy-making, says: “Without these tax advantages, less capital would probably be allocated towards the BTL sector as a result.
“This would reduce the unfair competition that currently exists between older landlords and younger first-time buyers within Britain’s extremely tight housing market.”
Landlords should pay Capital Gains Tax when they sell their rental property, but the Intergenerational Foundation says there is widespread advice on how to avoid this.
Strategies include living in the property for a short time before selling it, or getting a partner to claim letting relief and thus reduce the profit subject to tax.
The paper proposes that CGT should be deducted at source during property transactions.
National Landlords Association chief executive Richard Lambert criticised the findings.
He said: “I’ve yet to meet a landlord who thinks they are fairly taxed, never mind that the system might be slanted in their favour.”
http://www.if.org.uk/wp-content/uploads/2013/11/Why-BTL-Equals-Big-Tax-Rip-off.pdf
.jpg)
Comments
I saw this report in the national press. Its stupid and provocative nonsense. Saying that "landlords get a tax break" where income tax is concerned is simply not true.
All people generating money in the course of a business pay tax on the income they receive, less the amount that have to unavoidably pay out in order to generate that income. We like to call this amount of money the "profit" - its the bit that actually ends up in our pocket.
As its the amount which ends up in our pocket we could also call it our "income" and, funnily enough the tax we pay on it is called "Income Tax".
What part of that is so difficult to understand?
As for CGT, the report talks about minimising it by the owner or their partner moving in, but you need to actually do this (i.e. physically move in and live there for a period of time) for it to be legal, and it still only wipes out the final three years worth of gains to the best of my knowledge.