New Stealth Tax Targets Holiday Home Owners
Owners of holiday homes here in the UK that rent their property out for a large proportion of the year are expected to be hit by a stealth tax. The new taxes look to affect over 60,000 holiday home owners, each one being charged an extra £400 each year.
The taxes will affect those who offer their house to rent for atleast 140 days a year. The home also has to actually be rented for a minimum of 70 out of the 140 days. It wouldn’t come as a surprise if we saw some home owners offering their home for atmost 139 days a year.
The reason why these taxes are coming into effect is because currently the tax rules for holiday home owners break European laws. This is because UK holiday home owners are classed as traders which means that can benefit from reduced taxes on certain things. The new stealth taxes will mean that holiday home owners are named as investors, not traders, meaning they will have to pay more taxes.
Although this won’t be good for holiday home owners, and the tourist market, it will be good for the Government, atleast for a while. With around 60,000 UK holiday home owners being hit by the new stealth taxes, the Government looks to make around £20 million. Despite the Government making this extra £20 million, it could prove to be worse for the Government than first appears.
This new stealth tax won’t come as good news for holiday home owners. Many already have to pay high amounts for essentials like maintenance and holiday cottage insurance. Now as a result of the new stealth taxes, holiday home owners won’t be making as much income and this could end up forcing some homes to close. According to tourism experts, the results of the new stealth taxes could end up costing the tourism industry £200 million. Not only will money be lost from a reduced amount of tourists, but jobs will also be lost with the increased amount of closing holiday homes. Yet more unwelcomed news for the recession.
If you are after insurance for holiday homes based in the UK, or for overseas property insurance for your holiday home abroad, Schofields is the place to go.
Benefits of Buying Real Estate for the First Time Buyers
When you invest in anything, you will pay taxes in one form or another. If you invest in real estate, then you pay property taxes. If you invest in stocks, then you will likely pay capital gains taxes. In the US, The Internal Revenue Service or the IRS collects taxes and enforces the tax laws. The IRS is an agency within the Department of Treasury and is responsible for interpretation and application of Federal tax law. If you fail to pay taxes, then the IRS start the collection process of your taxes owed plus IRS tax penalties and interests. Most people want to pay the least amount of taxes they can get away with which is the reason why tax planning is such as popular service. There are many free tax tips that will show you how to keep as much of your hard earned money in your pocket as possible.
Property tax is an ad valorem tax that an owner must pay on the value of the home being taxed. Property tax can be defined as “generally, tax imposed by municipalities upon owners of property within their jurisdiction based on the value of such property.” The taxing authority requires an appraisal of the value of the property, and tax is assessed as a percentage of that value. Forms of property tax used vary between countries and jurisdictions.
Now that property prices have declined sharply, the government is providing even more incentives to attract people to purchase homes or invest in properties. They hope that new home buyers will help stimulate the economy and help the real estate market. The new home buying tax credit, for instance, gives a new homeowner a maximum of $7,500 tax credit or $8,000 if the home is purchased in 2009. This great tax credit is for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full tax credit is available for homes costing $75,000 or more or $80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009. This first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.