Property developers letting out newly built properties beware
February 20, 2009
The unfavourable economic climate almost all over the world and slowdown in property markets has made some property developers let out newly built properties which are proving difficult to sell. Although this seems to be a source of income for property developers in these difficult times, it is essential that they are made aware of the VAT implications of these situations which could include penalties and liabilities.
However, ways have been devised to recover VAT incurred by developers based on the intent with which the property is used. This includes leasing newly built property for over 21 years or selling it and is categorised as zero-rated supply. Those developers, who chose to lease their newly built properties for VAT purposes, will be unable to recover the VAT costs incurred during construction. The reason behind this is that they will be seen as investors rather than developers.
Once the market recovers, it is likely that developers will resume their intentions to sell the property. If this is the case, only a certain part of the originally recovered VAT will have to be paid. Keeping the interests of property developers in mind, it is important to make them aware of these consequences so that during the slump in the property market, they can choose to either let out these new properties or leave them empty while looking for buyers.
Popularity: 18%
Top 10 Most Expensive Areas in the UK for Council Tax
April 24, 2008
CIPFA the Statistical Information Service has released a report listing the top 10 most expensive areas in the UK for Council Tax
Here are the results:
Sedgefield Borough Council, Labour, £1,613.10
Rutland County Council, Conservative, £1,606.38
South Bedfordshire DC, Conservative, £1,593.51
Newark & Sherwood District Council, Conservative, £1,591.81
Easington District Council, Labour, £1,586.71
Royal Borough of Kingston-upon-Thames, Liberal Democrats, £1,580.08
Weymouth & Portland Borough Council, No Overall Control, £1,567.77
Hartlepool Borough Council, Labour, £1,565.48
Mansfield District Council, Independent, £1,546.38
LB Richmond upon Thames, Liberal Democrats, £1,543.76
Popularity: 34%
HRMC Advises Investors to Seek Property Tax Help
April 9, 2008
HM Revenue & Customs (HMRC) investigators are now focusing on property investors. Several hundred property investors received letters from HMRC stating that apparently they have not included their rental income on their tax returns even though they own rental property. The HMRC offered property tax advice to the affected parties to rectify their affairs.
HMRC’s officials stated that continuing profiling activities have been identified. Whether by mistake, misunderstanding of the complex property tax issues, or misinformation there is a considerably high risk of property tax being underpaid by investors. The HRMC insists to collect the right amount of tax and strongly recommended investor to seek property tax help of a property tax consultant.
Popularity: 26%
Capital Gains Tax (CGT ) Changes Will Test Investors
April 2, 2008
The international credit ratings agency, Fitch Ratings, has advised that forthcoming changes to CGT will put the buy to let market to the test. The tax changes are thought to be implemented from April 6th.
Fitch Ratings believes that the lower rate of CGT will test investors’ ability when it comes to keeping their existing properties, enticing many to sell in order to profit from past capital appreciation.
Stuart Jennings, group credit officer at Fitch said:
With expectation of further house price decline in the coming months, the capital growth incentive for buy-to-let investment has faded.
Data on recent buy-to-let investor behaviour shows an increasing number ‘marking time’. This may change when the new tax treatment effectively makes it cheaper to sell.
Popularity: 25%
Capital Gains Tax Changes Didn’t Change Buy to Let Investors
March 19, 2008
A recent survey carried by the Young Group – property portfolio manager – has found that 84 per cent of the buy to let investors think that the proposed Capital Gains Tax changes didn’t affect their property investment plans.
The survey asked 500 active UK property investors in the buy to let market. Thirty nine percent of the respondents believe that property prices outside London are likely to remain stagnant this year and 95 per cent plan not to sell their residential property investments this year.
A staggering 50 per cent declared that are actively looking to buy London residential properties in the next 12 months, while no more than 6 per cent of those surveyed wish to acquire UK property outside London.
Eighty Six per cent of the participants think property prices in London will raise or remain the same for 12 months, in comparison to 82 per cent in the last quarter of 2007.
Lastly, 89 per cent of property investors anticipate the Base Rate to be below 5.00% in the first quarter of 2009.
The chief executive of Young Group, Neil Young, added:
As purchase transaction volumes in the residential property investment market reduce, it is increasingly evident that the London market is distinct from that of the UK as a whole. Both property and rental values in the capital are cushioned from the cooling in the housing market, buoyed as a result of the inherent disparity between supply and demand.
Popularity: 21%
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