Rachel Reeves considering charging CGT on sale of main residence?

[Another76543]

It’s being reported today that Reeves’ latest idea is to tax homeowners on the capital gain made on the sale of their homes, where that home is above a certain value. From The Independent

“Rachel Reeves is considering hitting the owners of high-value properties with capital gains tax when they sell their homes as part of an attempt to fill a £40bn hole in the public purse.
The chancellor is said to be looking at ending the current exemption from capital gains tax for primary residences as she seeks ways to raise cash in the face of dire warnings about the state of the public finances - a move that would be seen as a "mansion tax".
Such a move would see higher-rate taxpayers pay 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy.

Sources told The Times that under proposals being considered for the autumn budget, the private residence relief would end for properties above a certain threshold.
The threshold is said to still be under consideration…….. “

They send off the forms and the councils take weeks and weeks to come back with the answers

Why do they? Who the fuck uses paper any more? All this information should be online and accessible to anyone from a legal firm. You can keep making excuses until the cows come home but you’ll convince nobody who has experienced an infinitely better service in the past.

Given the last time we moved our solicitor argued the toss that we were at risk from ground water flooding and shouldn't buy the property because we were too close to a ground water source, I'm inclined to think some solicitors are beyond help and reason.

We were buying a house at the top of a hill. One of the reasons we wanted to buy a house at the top of a hill was because of flooding issues in the future and had chosen it deliberately because of it's elevated location.

If we flood from ground water, we have bigger problems than worrying about the house as most of the north west will be underwater.

I'm inclined to think some solicitors are beyond help and reason.

I think you’re right. And some of them think their job is to make the entire process as lengthy and stressful as possible.

In our case we thoroughly believe it was a power trip and they were trying to be difficult for reasons I won't go into here.

We were unimpressed to say the least.

Otherwise they've been very good and very thorough (which many solicitors aren't) on some complicated and unusual conveyancing stuff which we did need.

I think they try it on to try and make money if I'm honest. If it's all online, then it takes less time and they can't charge as much (and people can conduct searches themselves without the aid of a solicitor).

We knew they were trying it on and they didn't like being told to stop being so bloody ridiculous.

I didn't say it was paper for goodness sake. Obviously its done electronically

Maybe it is location-dependent, but our two recent purchases (one fell through the day before exchange as seller pulled out) took 11 and 14 weeks respectively. And the second one only took 14 weeks because the seller hadn’t found an onward purchase.

This won’t cause a market crash. It might serve people with a lot of money to take on a project buying big, expensive, but worn out unmaintained homes; by driving their cost down a little.

But it will inflate the cost of flats and small houses which will affect everyone on a lower income, including young families, separated and divorced people, the downsizing elderly people who have left their big homes, young people who need starter homes and so on. And then presumably this pressure on affordable smaller homes would push rents up correspondingly as people try to save enough to buy stuck in rented accommodation. The only solution is to build more homes, surely.

You wouldnt dodge the stamp duty though
Youd pay a sum every year instead of a lump sum at point of sale and depending on how old you are you’d pay more than the original stamp duty

That’s a tax bill of £120,000 + a yearly extra tax bill for life (assuming you don’t decide to rent instead )

Currently
You would sell your home of 1.6
buy a new home of 800,000 and pay £30k stamp duty ( assuming lower income)
( You could then invest £770,000 to live off all taxed of course which pensioners may well have been relying on )

The difference between the two is
an extra tax bill of £90,000 plus the cost of a yearly extra tax for life.

Short term gain but that’s no way to run a Government
this is a long term loss as we will see a slowing down if the housing market in the future

How are the younger generation who have to put most of their income into acquiring property upfront at the cost of pensions, going to be paying a high annual property tax? When most of them won’t even have a pension that is enough to survive on?
Surely if they do CGT it should be allowed to deduct capital expenditure like extension, not the opposite (which mostly also already attracted VAT) and gains from those in their 50s with small pension pots - one should be allowed to pay into a pension pot? (No top up from government) and if you buy another property within 1-2 years you should be able to transfer the gain.

It is only people cashing out for good and not applying to a pension pot or investing in their next property who should be taxed on any gain on main residence.

It’s because of new fraud checks
These can’t be done till closer to the time of completion which means all searches are done first then the fraud checks
These were never done before, not to the extent they are these days anyway.
Every penny has to be tracked back to its source

Even with today’s taxes why would you do that. That’s two sets of stamp duty and what for
If people chose to move because of old age they do so with the expectation of personal future need.

Surely old people would move into rented if more were available on a secure basis and at a reasonable price, as is the case in lots of other European countries?
The issue for old people is they do not know how much longer they will live and they need security from being evicted and flexibility.

How would you prove and have receipts for capital gain improvements over a 10 year period!!

roof replacement is that a capital gain
new windows
new front door
garden landscaping
upgraded driveway
patio
etc etc

I don’t think that flies either. Example the simplest you could possibly imagine - a transaction with a probate property and a cash first time buyer so no chain. The cash derived from a transaction that was handled by the buyer’s solicitor so they already held the paper trail. It took four months.

I don’t see how new windows are a CG for example if you are just replacing windows that have worn out over time.

Total farce by current and previous governments, if they stopped wasting tax payers money on crap schemes ( ie HS2 and sending immigrants to other countries and fitting out barges that never get used) the government has wasted billions!!!

Exactly.. so why use your taxed earnt money to replace your windows to then have to pay CGT on the improvement value later!!!

Agree a simple sale shouldnt
Our last buyers who bought this January were cash buyers
however
the money was in several bank accounts and some was coming from family
Each source had to be tracked back to find its original source
Usually a cash sale would go through in 11/12 weeks but on this occasion it took 17weeks because of those checks
First time buyer and we had already moved out so no chain

Agree
People won’t spend money on much needed maintenance and our existing housing stock will suffer

New windows are an improvement if you go from single glazing to triple glazing, for example. All added green stuff usually counts as a capital improvement. There would be set criteria for what counts. Loft conversion is adding value, so is an extension. So is an insulated front door.

Of course they will.

Well we need to spend in the order of 150,000 on our listed property
It won’t make that that much difference in sale price but for the sake of the building it is needed

We’re now questioning whether we should and will wait and see come the Autumn budget

There is no reason to suppose that improvements won’t be deductible.

They are currently on investment properties.

Capital improvements, on the other hand – those that upgrade, enhance, or add value to the property – can be deducted from your gain, helping to reduce your final CGT bill.

The easiest way to instigate this is to use the existing cgtax calculator on Govn uk
You put in your details including all costs which include improvements ( not personal choose upgrades there’s a list of what can be included ) then you’re given your bill straight away
Obviously they’d have to remove the section on PRR
You pay based on that then send in / upload receipts

However
Someone has to check those receipts. There’s a cost to that. Or maybe to make it cost effective they won’t bother