The recent Budget increase in Capital Gains Tax from 18% to 28% has prompted fears that house prices will start to fall.
Capital Gains Tax is currently applied to property including second homes and buy-to-let properties and a leading Building Society has said that average house values have made almost a 10 per cent increase in the last year. This could fall drastically if the market becomes saturated with properties.
If you dispose of a property and the value of it has increased you will be liable to pay tax on the profit made. This does not apply to your main home.
The recovery of the housing market this year has been fuelled by the fact that properties for sale could not meet the demands of people wishing to buy. Should the proposed rise in CTG take effect some leading economics and mortgage experts fear the property market will become unstable with increased pressure on property prices.
There are also fears that anyone who lives in a care home could become an unintended victim of the tax hike.
Someone who has lived for three years in a care home and still retains ownership of their family home, could find themselves liable for Capital Gains Tax. The care home would be considered as the primary residence and should they sell their former family home this would then be viewed by the tax office as a ‘second property’. If the family home is sold to fund further care and has increased in value they would then be charged Capital Gains Tax.
It is possible to transfer assets if you are married or in a civil partnership, to your wife, husband or civil partner without having to pay Capital Gains Tax.
Contact me if you have any concerns or questions about Capital Gains Tax or any aspect of planning your financial future. We always offer a free initial appointment to discuss your situation – call us 01202 499255 to arrange a suitable time.
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