Will potential CGT be retrospective?
Question from Paul updated on 18th February 2010:
Our expert Mark Withers responded:
Unfortunately my crystal ball is just as cloudy as yours on this one !
Try asking your local MP. Or better still, tell him what you think they should do now before it's too late. The reality is no decision has been made to introduce one at all yet let alone the detail. If one were to speculate... The short term effect of it would be entirely dependant on it's application to the existing asset base. Three options would be possible.
1. Tax existing property based on historic cost.
2. Tax existing property based on an uplift to market value on passing of the regime into law.
3. Tax only gains on new acquisitions after the introduction of the regime.
Hopefully, it would be 3. But consider this, If they only taxed new acquisitions and introduced the CGT mid term in a declining property cycle that would decline further as a result of the introduction of CGT they wouldn't be likely to actually collect any tax from it before they faced re election, I'm hopeful that the political reality of this might dawn on them before they actually pass something into law that they might live to regret from the opposition benches. Only time will tell.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.