'Clouds on the horizon' for real estate tax, says expert

The outcome of the General Election should not result in significant change for the property industry, but the new diverted profits tax and possible future restrictions on interest deductibility represent "a few clouds on the horizon" for property tax, an expert has said.

Real estate tax expert John Christian of Pinsent Masons, the law firm behind Out-Law.com, said that real estate had "not traditionally been a target for tax raising" other than for stamp duty land tax (SDLT). A new government is unlikely to wish to reverse the residential SDLT changes in the Autumn Statement, which abolish the old 'slab system' for home purchases, he said. Many saw this system as unfair,  as if the consideration was over a threshold for higher rates, even if only by a very small amount, SDLT was payable on the whole consideration at the higher rate.

He said that, although Labour has pledged to introduce a 'mansion tax', this will not directly affect property investors, other than specialist investors in prime residential letting. However, he said that "some have predicted it will slow the London residential market".

Christian said that one area of concern for the real estate sector is possible restrictions to the availability of tax relief for interest payments.

Read full story: 'Clouds on the horizon' for real estate tax, says expert