BOLTHOLES AND BUY-TO-LETS

CORBYN’S capital gains tax plans will push up the tax paid on the sales of second homes whether you own them for pleasure or for profit as a landlord. Higher rate and additional rate taxpayers currently pay 28 per cent on gains from a sale of a second property.

But Labour’s alignment of the tax with the rate paid on an individual’s income means it will cost you more. Sellers will have to pay at least 40 per cent on the profit of their sale – or as much as 50 per cent if they fall in to the new planned higher rate of income tax.

Buy-to-let owners have already been selling in droves so if you are thinking of selling up, now might be the time it if you fear a Labour victory in next month’s polls.

Sean McCann, chartered financial planner for mutual insurer NFU Mutual, says: ‘Capital gains tax receipts have more than doubled in the past five years as a result of people selling buy-to-lets due to the onerous tax treatment. Landlords are already being caught in a very effective pincer movement from the taxman.

‘From one side, the higher rate tax relief on mortgage interest is gradually being phased out, making letting out properties less profitable. On the other side, landlords looking to sell buy-to-let properties are being squeezed with an extra eight per cent capital gains tax.’

ACTION PLAN:

SELL up quickly if you expect Labour to win. Alternatively, married couples can transfer the property to the lower earning spouse to reduce the tax burden on rental income – or any capital gains on the eventual sale of the property.