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A report published by the Resolution Foundation has pushed the government to consider taxing profits made from appreciating property values, including both primary and additional properties.
It is reported that gains in London properties is on average £76,000 over the last 20 years. These rising house prices are valued at around £3 trillion which the report says is “largely unearned”.
The ‘largely untaxed’ properties are highlighted as the primary residences as they are exempt from capital gains tax, whereas other investments could face 10% to 28% in CGT.
If the government is to act on this it is estimated to raise £11 billion a year, with the tax due only when the owners sell or pass away. This would also directly affect inheritance tax as it would more primary residences off the nil rate band.
The ‘wealth windfall’ is the next focal point of discussion as political solutions are searched for to tackle the housing ownership problems, but even if this tax was implemented it is unsure if that money raised would go to improving the housing market.
There is also the effect it would have on property investors and private landlords, and if with the ever increasing tax and property requirements would create an exodus for many in the industry.
Written by Toby Dawson
