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UK capital gains tax changes may hit expat property owners
| Published: | 8 Nov at 6 PM |
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Expats with properties in the UK may be in the firing line if the Chancellor’s plan to slap capital gains tax on the sales of all overseas investor owned homes goes ahead.
Current UK tax laws exempt overseas property owners from capital gains tax liabilities on real estate sales after five years’ residence abroad, with thousands of first home properties still owned by expats and thousands more owned as a buy-to-let investment. In addition, Central London has become a real estate hot spot for Chinese and Russian investors, driving prices to an all-time high.
The capital gains tax law at present in force has been a pillar of retirement strategy for expats who let their former homes after migrating and sell after five years, thus making rental gains as well as avoiding the tax. The proposed changes were leaked to the press in order to test reactions before launching the policy in the Chancellor’s Autumn Budget Statement.
It's not clear at present if or how UK expat-owned property may be affected, but the uptake of the law would bring Britain into line with most other EU member states. A British Property Federation spokesperson told the media that changing the rules could introduce uncertainty resulting in a fall-back in house building as well as possibly affecting the commercial property sector.
According to BPF CEO Liz Pearce, the boom in central London property prices has more to do with a shortage of suitable homes than with an invasion of foreign investors. She adds that the policy is a tax revenue-raising kneejerk-style reaction doomed to failure as most owners will just sit on their properties unless forced to sell by unforeseen circumstances.
Current UK tax laws exempt overseas property owners from capital gains tax liabilities on real estate sales after five years’ residence abroad, with thousands of first home properties still owned by expats and thousands more owned as a buy-to-let investment. In addition, Central London has become a real estate hot spot for Chinese and Russian investors, driving prices to an all-time high.
The capital gains tax law at present in force has been a pillar of retirement strategy for expats who let their former homes after migrating and sell after five years, thus making rental gains as well as avoiding the tax. The proposed changes were leaked to the press in order to test reactions before launching the policy in the Chancellor’s Autumn Budget Statement.
It's not clear at present if or how UK expat-owned property may be affected, but the uptake of the law would bring Britain into line with most other EU member states. A British Property Federation spokesperson told the media that changing the rules could introduce uncertainty resulting in a fall-back in house building as well as possibly affecting the commercial property sector.
According to BPF CEO Liz Pearce, the boom in central London property prices has more to do with a shortage of suitable homes than with an invasion of foreign investors. She adds that the policy is a tax revenue-raising kneejerk-style reaction doomed to failure as most owners will just sit on their properties unless forced to sell by unforeseen circumstances.
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