If, like many fifty year olds, you abandoned your pension a while back to fund a buy-to-let property the new UK government might be worrying you.
Their move to bring Capital Gains Tax (CGT) inline with income tax might seem fair for professional landlords, who buy and sell residential property for profit, but not for a private landlord whose second property is his retirement nest egg.
The liberal elements of the government coalition are obviously behind this as the Tory stance on CGT was very different pre-election! However the public seemed to perceive CGT as a tax on the rich and the Conservatives lost votes because they want to increase the threshold.
But now we realise it’s a tax that effects many people’s retirement plans.
The CGT increase is being regarded as another blow to the buy-to-let investment market, which has seen property prices slump over the last few years.
Ironically, the CGT rate is actually irrelevant if you sell your second home for less than you paid for it – which wont give many buy-to-let investors much comfort, I know!
Then the recent problem getting a buy-to-let mortgage, post banking crisis, has not helped much either, putting many off making second home investments and generally depressing the housing market for everyone.
But let’s not forget that pensions have faired no better over the last decade and disastrously in many cases. (e.g Equitable Life ).
At least your buy-to-let property provides an income right now and the decision on when to sell and retire is solely yours. I’m sure people will find ways to designate a buy-to-let property as a primary residence – for advice on this just ask an MP!
Given the brewing state pensions crisis, where we are all getting old and funds are running out, you would have thought the government would encourage self funded retirement rather then inhibit it.
Perhaps a fairer policy would be to exempt modest second homes from CGT or distinguish a private landlord from a professional one in some other way.