Think tank calls for tax on property sale profits
23 June 2003
Independent think tank, the Social Market Foundation (SMF), is suggesting that homeowners should be taxed on the profits from the sale of their homes.
The SMF believes that taxing homeowners when they sell would reduce the volatility in the housing market.
It claims that sellers should pay 40 per cent capital gains tax on profits, which would improve the shortage of properties on the market.
The SMF argues that homeowners are hanging onto their properties in the belief that by holding on they will sell their house for more, but, if taxed, they would be encouraged to sell as their property value increases because their tax bill would also be increasing.
The organisation also points out that, by taxing house selling profits at 40 per cent, people would have less money to buy their next home, reducing the upward pressure on the housing market.
Author of the SMF's report, Tom Startup commented, 'Capital gains tax on home-ownership and an annual property tax proportional to the market value of the property would be necessary to reduce volatility and restore building levels.'
The SMF claims that reducing or abolishing council tax or stamp duty could offset the increase in tax.