For the second time this year, the Budget delivered surprises and extra tax implications for home owners.
For private landlords with buy-to-let properties, the Government’s announcement on Capital Gains Tax meant they could breathe a slight sigh of relief as the increase to 28% was a lot lower than the 40% or 50% which had been feared.
Landlords had been so concerned about the financial implications, estate agents reported a flood of enquiries from those eager to off-load their properties before the changes.
CGT is a tax on the gains you make when you sell or give away a property, or other assets. There's a tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill and in light of the new increased rate, it is particularly advisable to speak to a solicitor or tax advisor who can help you make sure the arrangements are structured as cost-efficiently as possible.
The Chancellor also announced that VAT is set to rise to 20% from January 4th next year. Whilst this change won’t be felt so much when making smaller everyday purchases, buying a home is one of the biggest purchases anyone ever makes, and as we know, the higher the cost, the more VAT will be charged.
The increase will affect estate agents fees, EPC fees, possibly search fees, the cost of new household goods, and if any home improvements are needed to your current or new home, it will increase workman’s fees too.
My advice to homeowners wanting to move would be to get your home on the market now, and aim to have completed your move before Christmas to avoid the VAT rise.
While it may seem a long time off now while the sun is shining, there can be quite a lot to consider in terms of finding an estate agent to market your property, having it valued, placing it on the market, finding a buyer and then completing the sale particularly where there is a chain involved.
Whilst these increased taxes are an extra hurdle for property owners in particular, careful planning now can save hundreds if not thousands of pounds in the future.
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