Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Capital Gains Tax Impact on Markets, Buy to Let Rush to Sell Properties

Personal_Finance / Taxes May 31, 2010 - 05:06 AM GMT

By: Nadeem_Walayat

Personal_Finance

The FTSE is already suffering under the implications of the proposed Capital Gains Tax changes of expectations that the tax will rise from 18% to 40% which has resulted in gains being banked by private investors ahead of the tax hike on 22nd June. However the real hit from the tax hike will be felt not in the stock market but the property market, which hits the large number of buy to let sector investors who rely up on capital gains as an important element in generating total returns.


Therefore expectations are for a surge in buy to let investors rushing to sell ahead of the tax hike, for which they have a very short window of opportunity of 22 days remaining. Another major contributing factor is scrapping of the costly Home Information Packs (HIPS), that has kept supply limited and hence supported house prices. HIPs have now gone and so home owners have no extra cost to bare by putting their homes on the markets which is as illustrated by the property website Rightmove that is seeing a 34% rise in listings.

Of greatest concern is that a tax hike without reintroducing indexation for inflation would destroy the incentive for long-term investing. Therefore the government would be using inflation as a stealth tax to DOUBLE tax long-term investments, especially in the property market into oblivion, where it will become near impossible for an investor to make a gain in real terms. The same applies to stock market investments outside of tax free wrappers such as ISA's and SIPs, as there would be NO INCENTIVE to invest for the long-run.

On top of this there is mounting evidence that raising capital gains tax may actually result in less tax revenue as people are less willing to realise gains i.e. to delay action, whereas a lower tax rate makes investors more likely to realise gains resulting in greater market turnover.

Source: http://www.marketoracle.co.uk/Article19921.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Nasir
31 May 10, 15:03
capital gains tax theft

This is what the government loves, taxing the poor and middleclasses, its all about control, statistics prove that 95% of the population will never become wealthy, and these taxes, inflation and other ways of ripping off hardworking citizens are just the tip of the iceberg. 40%/50% capital gains tax if implemented for lower income earners as well as the more well off would just be another nail in the coffin of this government. Labour seem relaxed in opposition just waiting for the inevitable, it may take 5 years but they don't mind. If you sell your property, pay your CGT and then die, you still have to pay inheritance tax on whatevers left, well your inheritants do. Its just appalling how people get pushed and shoved their whole lives and never question well why?


John Spencer
31 May 10, 16:45
CGT

As a first time buyer who works hard for an average salary but still cannot get my foot on the property ladder I can only say one thing: BRING IT ON! A house should be a place to live not a source of income for those who got lucky by purchasing at a time before banks became irresponsible with their lending and drove prices artificially high. Why should my salary which I slog my guts off for be more taxable than an artificial price ceiling? Second home owners are not 'prudent' they are in it for the buck and they know that an economy heavily based on property speculation is coming to an end.


Nadeem_Walayat
31 May 10, 17:40
Government Interference

As with everything, if you peel away the layers you see the hand of government manipulation.

Labour should NEVER have cut the tax to 18% from 40% and also should not have aboloshed indexation. The policy was to help boost the UK housing market in advance of an election.

Second home owners see these homes as pensions, which is related to the fraud they are subjected to if they take out personal pension plans that NEVER live up to expectations, or as we saw with standardlife default on pensions.

My next indepth analysis / ebook will analyse the UK housing market.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in