The Second Home Owners are just as much as the bankers the very people who should be paying more.

[TheBigotBasher]

The second home owners and the "buy to letters" in particular are the people who gained from a property boom that they themselves helped fuel. No real wealth was created, they often needed no real cash to invest. Provided that they could get themselves a tenant they did not even have to pay for anything at all towards "their investment". They just needed the artificial equity caused by the hyper inflation on their existing home.

They created no employment. They created no new business, in fact by fuelling hyper inflation in the property market they had an immeasurable level of harm. The property price inflation that they were fuelling stopped people getting "a foot on the ladder".

Capital Gains taxes for firms are very different to a capital gains tax on profits generated by a deliberate level of high inflation left in he economy for nothing more than political advantage.

They have already been the beneficiaries of wealth redistribution, from the young and those without a home of their own to those who have multiples of houses. There is no justification for the Telegraph campaign.

Just to add some of the rentaquote MP's out to fight this are also beneficiaries of that very hyper inflation in the property market, what is worse is that we all paid for that.

[dipsydoodle]

1. In a nutshell

Fuck 'em.

[fedsron2us]

2. Since much of this speculation was done with borrowed money

the banks are very much complicit in this situation as are successive governments who have been only too happy to support the idea that high property prices are a good thing rather than a drain on the productive capacity of the UK. I am always amazed that people think fuel or food price inflation is terrible but that it is fine for property to double in price every 5 years. The fact is that the average UK house price of £160,000 is still way in excess of the 3-3.5 times average earnings that is sustainable. They have got to come down a lot further before things are back in balance.

The problem with achieving this goal is that any property asset price crash is going to sink most UK banks balance sheets which is how the current financial crisis started in the first place. The CGT rises may have unpredictable effects on the wider availability of credit so the Treasury needs to tread carefully.

[BooScout]

3. As someone who this proposal greatly affects....

I must protest. Not everyone borrowed to invest in either stocks or 2nd homes. Rather than stick our hard earned savings in a bank account and make nothing these past few years.......and rather than stick it in a pension plan to have Gordon Brown muck it up......we invested........and now on the very verge of retirement........we are totally screwed.

We are very far from being rich. In fact we are working class. And I strongly resent being branded as some evil thing that contributed nothing. We haven't taken a day off in 4 years. We have had one holiday in 10 years. We scrimped and saved and did without. All for nothing.

[TheBigotBasher]

4. You will still earn

in excess of 60% of the money gained through property price inflation and much of the cgt can also be offset against any repairs that had to be carried out.

[BooScout]

6. Our investments are in stocks....

Not a rental property. If they drop the £10,100 threshold and raise the tax rate above 18 percent we are screwed. Plain and simple. We can no longer afford to retire.

I guess the politicans think it's ok to screw the people out of £40,000 by 'renting a room'.......but it's not ok for people to scrimp and save and plan for a retirement.

I'm disgusted with the lot of them.

[fedsron2us]

5. The Budget has not even been published yet so we do not know the proposals for certain.

What appears to be intended is a return to the situation in the 1980s when Capital Gains were taxed at identical levels to income but that extra reliefs were available to those who held assets for a long period via indexation.

http://uk.finance.yahoo.com/news/investors-need-relief-if-capital-gains-tax-rises-tele-6b1aa9de2273.html?x=0

While you personally may not have borrowed money to invest in assets many people did.

There can not be any doubt that the last governments reduction of CGT to 18% has encouraged speculation in the property market that has driven up house prices and indirectly placed a huge debt burden on the UK economy in the form of high mortgage costs. It is not only speculators who have been taking on debt to buy property. Many ordinary people have been forced to extend themselves just to put a roof over their heads. This situation is simply no longer tenable since the debt burden has become so large that any slight fluctuation in interest rates can drive many borrowers to defaults on loans which in turn blows up the lenders balance sheets leading many banks to the verge of insolvency

What is needed is a tax system that encourages those who invest their capital in businesses that facilitate productive growth and earnings while discouraging people from buying assets and then sitting on them merely in the hope that their price will go up.

I think the government will have to be careful how they introduce the changes to avoid precipitating a complete asset price crash. They need to deflate the market gradually. However, if they do nothing then our financial system will remain little more than an exercise in ponzi economics which will just lead to shorter and shorter cycles of boom and bust each more damaging than its predecessor . I don't agree with much of Cameron's governments policy but if they go back to Lawson's 1988 proposals of taxing most Capital Gains at the same level as income then I would be in favour of it.

[BooScout]

7. No one forced anyone to buy a house....

....that they could not afford. No one forced people to finance beyond their means. We watched it happen in the States and in the UK. People were crazy. We saw 100 percent mortgages. We saw people approved to borrow who should have never been approved. We saw people take 2nd mortgages to lead lifestyles they could ill afford.

We watched pension plans decimated. We watched interest rates for savers drop to at or near zero. What exactly were people who wanted their savings to make a little money supposed to do? Bury their money in the back garden? Hide it under the mattress?

The policy proposal doesn't come from Cameron........it comes from the Lib Dems and their ideas of a socialist utopia......the policy is a sellout by the Tories for the power. In the end, they could care less about their agenda...it's all about power and selling mum down the river to get it.

It's all about change.......nevermind that the changes don't make sense. Let them drive the rates up and watch the investors turn their back on the economy and any hope of a recovery.

[muriel_volestrangler]

8. If you compare it to someone who saved the money in a savings account

They will have paid income tax on all of the interest they earned. Isn't it fair you pay roughly the same on the capital gains you have made?

There have been, of course, options like ISAs and self-invested pensions, which don't attract capital gains tax. And the latter, of course, was designed for retirement saving. I can't remember your and your husband's nationalities at the moment, so I don't know for sure whether you both qualified for both of those; but the government will be assuming that the investors are British citizens.

[fedsron2us]

9. Yes no one is forced to buy anything

But the reality is that people do need somewhere to live be it owner occupied or rental. If you are a couple with kids then you are going to struggle to get any sort of decent rental property and because of the nature of the UK law most tenancies are not assured longer than six months. This means many people are driven to buy. Add in the fact that the population had to endure virtually 24 hour TV propaganda pumping the property market in the form of programs such as Location,Location,Location then it is easy to see why resistance crumbled.

You also have to realise that if people were not buying then many buy to let investors would have to rely just on the rental income from their property without the prospect of any capital gain. Many are completely unprepared for that scenario as they are not really professional landlords so are surprised to find that rental voids (ie when the property has no tenant and generates no income) are actually quite common.

The Lib Dems may be behind the current proposals but I suspect Osborne is more than happy for them to make the running on his behalf. Even City insiders realise that current CGT arrangements are unsustainable.

Given that you get a £10,100 annual personal CGT allowance you actually get more tax free on your gains than most people paying income tax where the personal allowance is lower.

http://www.hmrc.gov.uk/rates/cgt.htm#2

You can also roll over losses from earlier years. If you are invested in shares that gives quite a lot of flexibility to dispose of assets in chunks to gain the best tax deal. Of course, that is not so easy when dealing with property which usually has to be sold as a whole so realising the entire gain immediately but then this has always been the case. The truth is people should never invest in property on the basis of capital gain but only if they think the rental yield justifies the purchase. This is a harsh reality that many amateur buy to let investors are about to find out.

[fedsron2us]

10. The argument over CGT is throwing up some strange anomolies in British politics

There has been a concerted attack by some elements of the Tory press and people such as David Davis and John Redwood to get the CGT proposal watered down.

As a result we now have the bizarre situation where the Tories under Mrs Thatcher and Nigel Lawson equalised the rates of income tax and Capital Gains Tax as a matter or principle, a step imitating similar legislation from the Reagan administration in the USA. A decade or so later Labour under Tony Blair and Gordon Brown tinker around with the arrangement. Ultimately they reduce CGT to 18% so capital gains are effectively taxed lower than income. When they lose the election the incoming Lib Dem and Conservative coalition propose to revert to the former Thatcher era mechanism. At this point the Tory right wing and their friends in the media are up in arms in defence of a brief change in tax rates brought in by a Labour government which they previously claimed to despise.

Compounding the farce we have people like John Redwood a supposed disciple of Adam Smith being unable to distinguish between a true entrepreneurial capitalist and those who merely live off rents derived from the control of a resource such as land. His depiction of landlords as risk takers must have Adam Smith and David Ricardo spinning in their graves like tops.

Of course what it reveals is that the Tory right are far from being true believers in the free market and really just want to rig the tax system to preserve the tax privileges of a tiny section of society while placing the burden of paying down the national debt on the rest of the population. In effect when they talk about a free market and deregulation what they mean is is one where monopolists and established vested interests are able to operate free of government regulation while everyone is else is left "free" of anti-trust protection, and even of protection against fraud.

It is interesting that this fact is being ruthlessly exposed by their coming into contact with Orange book Liberal Democrats who actually do seem to take the theories of Smith and Ricardo seriously. Many Tories are finding this experience a lot less comfortable than dealing with the supposed socialists sitting on the opposition benches. What we are essentially seeing is the rerunning of a political debate that took place in the 19th Century. Of course back then the early socialists supported the economic liberals in their efforts to overthrow the Ancien Regime of aristocratic privilege even though they would subsequently fall out how the profits of production should be distributed. Now that Labour have completely lost their compass it would not surprise me if we wind up with David Davis attempting to reintroduce the Corn Laws as a private members bill with Harriet Harman supporting him.

We do live in very strange times.