Real Estate Taxes
Luxury Home Tax Hike by UK for Offshore Companies: George Osborne, the Chancellor of the Exchequer in UK, may have spotted that many owners of luxury home are offshore companies, which is a practice many investors indulge in the past as a move to take advantage of the lower tax rates applied to it. However, this will soon end as the UK Government has implemented taxes on real estates that are owned by these offshore companies.
Under this revision, a 15 percent stamp duty on company-based property transactions would have to be paid. In addition, homes worth £2m or more would have to pay a stamp duty rate of 7 percent, which was only 5% in the past. If all stamp duty collections would be met, it would generate £150m in a year for the country, which is a great aid to the growing budget deficit of the Government.
The Response of the Community: An Analytical Perspective
The real estate industry has already felt the decline in sales with its transactions for the past nine months, since it has been announced. Properties worth £10m or more that is commonly purchased by companies has felt a decline of 3.8 percent in sales. In London alone, properties worth £2m to £5m have gone down to 22 percent in comparison to its previous sales.
Nevertheless, there are still significant owners who continued to purchase these luxury homes, without considering the additional taxes that will be charged to them.
However, analysts argue that the problem does not lie with the increased taxes imposed by the government; rather it is the quality of the homes and properties sold. Many were hoping to purchase properties in the London area but only a handful is available.
The Super-Rich members of society do not mind paying additional taxes, but they do wish to purchase properties that would be worth their Euros in places they wish to reside.
There are approximately 5,995 ultra wealthy people residing in the UK, which is twice the number of the super rich in Paris. These individuals have a net worth of no less than $30 million with their combined assets they are estimated to own $1.3 trillion.
These people still consider London as one of the safest haven in the world. The increase in taxes bothers them less, what they are concerned is their anonymity.
As evidence, every single transaction in the past year since the implementation of the rule has been paid. It has already raised 100 million pounds for the country, and more would be expected as additional luxury real estate properties are being constructed in strategic locations in the UK.