It’s well known that property prices in London are the highest in the United Kingdom, partly due to the demand for rental properties, homes and business premises in the capital. However, a recently proposed mansion tax could mean that owning a large expensive property could be more costly than first anticipated.
In 2015 the UK’s general elections will be held and, depending on the outcome, this could have a huge effect on the property market. One of the biggest changes being proposed is the idea of introducing a mansion tax. This is an election promise of both Labour and the Lib Dems.
The question on everyone’s mind is who will pay this tax? It will start at around £250 per month for domestic properties around £2-3 million. Property investment news company Property Division have actually created an interesting documentation highlighting where the tax will start in London. According to their research, around 11,463 homes will be affected if this measure is introduced.
The owners of affected homes will have to pay out, and those who are higher rate tax payers need to start doing so immediately after it’s introduced. However, those who are on a lower wage and thus paying less tax are able to defer their payment until they sell their property, meaning that people who own large homes but aren’t on a large income will not be penalised.
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