Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18
Stock Market - This Time is Different. Really?! - 13th Feb 18
Gold and Silver Long-term Buy, Short-term Sell Signal - 13th Feb 18
SPX Futures Are Sliding... - 13th Feb 18
Stock Market Topping Process Begins. The Bubble Finds its Pin - 13th Feb 18
Math Behind the Stock Market Crash and What’s Next – PART2 - 13th Feb 18
Gold Stocks Groundhog Week - 13th Feb 18
Platinum Looks Poised for Surprising Gains This Year - 12th Feb 18
Friday's S&P 500 Stock Market Bounce To Continue, But Selling May Resume - 12th Feb 18
The Inflation Trade and Bond Yields Rising Result in Equities Correction - 12th Feb 18
February 2018 Stock Market Crisis – What Next? - 12th Feb 18
How To Profit From The Bitcoin Bloodbath - 12th Feb 18
The Philippine Economic Dream Could Be Within the Reach  - 12th Feb 18
Is the Stock Market Correction Over? - 12th Feb 18
What Does the Stock Market Decline Mean for Gold - 12th Feb 18
Addicted to SMIGGLE Mega Review, Pencil Cases, Stationary, Back Packs, Drinking Bottles, Toys... - 12th Feb 18
Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - 11th Feb 18
The Fed’s Impossible Choice, In Three Charts - 11th Feb 18
US Stock Market, Gold, Silver and the Macro Backdrop - 11th Feb 18
After Two weeks of Stock Market Decline, People Are Ssking, “Are We There Yet?” - 11th Feb 18
How to Grow Tomatoes From Seeds, Homegrown Organic Money Saving Gardening - 11th Feb 18
Youtube KILLS ALL Small Channels with New DeMonetization Rules - 11th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

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

© 2005-2018 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

6 Critical Money Making Rules