United Kingdom Finance Minister George Osborne could be set to
introduce a capital gains tax on foreign owners of British property.
Media reports revealed Osborne could be set to impose the tax to curb speculation by foreign owners of property in the U.K.
Currently, overseas owners are not subject to taxes on any capital gains they make
from their British property investments. British citizens must pay a
capital gains tax – typically 28 percent – on any profit when they sell
property that is not deemed to be their main residence.
Foreign
buyers in London account for as much as 70 percent of off-plan new
build property transactions, and in 2012 Singaporeans were the number
one overseas buyers in this sector according to research from Knight
Frank.
Stephanie McMahon, Head of Research for U.K. real
estate agency Strutt & Parker, said: “There is no doubt that London
has seen huge price growth, however it has to be acknowledged that this
has been curbed by other government interventions through various tax
measures including Stamp Duty Land Tax.”
“Whilst it is clear
that the government are proposing this new measure to take the heat out
of London, one must ask whether the idea of the ‘bubble’ has been
sensationalised. London, Greater London and the country as a whole have
very specific dynamics and markets and one cannot talk so generally.”
McMahon
added that talk of the tax may see a flurry of activity in the short
term, but it is likely that transaction levels will slow dramatically,
as happened with previous government interventions.
Taxation
of foreign buyers is not a new concept globally. New York increased its
capital gains tax from 15 percent to 23.8 percent and saw a high
increase in sales prior to the introduction of the new levy, while in
Singapore foreign buyers must pay an additional 15 percent on top of the
purchase price of their property.
There is no indication of
the level of capital gains tax that the U.K. government intends to
impose on overseas property buyers, or the timescale involved.
Andrew
Batt, International Group Editor of PropertyGuru Group, wrote this
story. To contact him about this or other stories email andrew@propertyguru.com.sg
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