Latest news with #capital gains tax
Yahoo
14 hours ago
- Business
- Yahoo
Trump wants to 'unleash' America's housing market — and is throwing his support behind MTG's big plan for US real estate
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. Typically, when you sell an asset for more than you paid, the profit is considered a capital gain — and subject to tax. With U.S. home prices having soared over the years, many homeowners looking to sell now find themselves in position to pay capital gains tax. But President Donald Trump is floating a plan to eliminate this tax specifically on home sales. At a White House Q&A on July 22, a reporter asked Trump for his view on scrapping the tax to help 'unleash' the housing market. Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Shop Top Mortgage Rates Personalized rates in minutes A quicker path to financial freedom Your Path to Homeownership 'We're thinking about that,' Trump replied. 'But [we] would also unleash it just by lowering the interest rates. If the Fed would lower the rates, we wouldn't even have to do that. But we are thinking about no tax on capital gains on houses.' Currently, if you've owned your primary home for at least two years and sell it with a capital gain, the IRS allows you to exclude up to $250,000 ($500,000 for joint filers) of the taxable gain. But that exclusion was set back in 1997 — when home prices were substantially lower. Trump's comment followed U.S. Rep. Marjorie Taylor Greene's recent introduction of the 'No Tax on Home Sales Act,' a bill that would eliminate federal capital gains taxes on the sale of primary residences altogether. 'Thank you, President Trump, for supporting my No Tax on Home Sales Act!' Greene posted on X after his remarks. 'You worked for it. You should keep it. Let's get this bill passed!' 'A problem for people who want to buy a home' Trump also took aim at the Federal Reserve during his chat with the press, blaming high interest rates for locking would-be buyers out of the housing market — and placing the blame squarely on Fed Chair Jerome Powell. '[Powell] is too late all the time,' Trump said. 'He should have lowered interest rates many times. Europe lowered their rate 10 times. We lowered ours none. And it's causing a problem for people who want to buy a home.' The Fed has been holding its benchmark interest rate steady at 4.25-4.50%, while Trump has said that rates should be three percentage points lower to help the economy. Powell addressed the impact of interest rates on the housing market last September. He acknowledged that the housing market was "in part frozen," with many homeowners hesitant to sell because they are locked in at lower mortgage rates. Meanwhile, Greene has argued her bill could help 'boost' the nation's housing supply by removing the capital gains tax obstacle that might discourage homeowners from selling. The lack of supply remains a pressing issue in the U.S. housing market. A recent Zillow study estimates a shortfall of 4.7 million homes nationwide. Still, experts aren't convinced the bill — at least in its current form — will go far. 'I think this could generate some interest, but they're more likely to raise the exemption than they are to eliminate the tax entirely,' Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, told CNBC. Even that could make a difference. Research by the National Association of Realtors estimates that about 1-in-3 homeowners have accumulated more equity than the federal capital gains tax exclusion would allow. Presently, sales profits that exceed the exemption limits may be taxed at 0%, 15% or 20%, depending on taxable income. Read more: BlackRock CEO Larry Fink has an important message for the next wave of American retirees — Getting on the real estate ladder — starting with $100 Soaring home prices and elevated mortgage rates have made buying a home increasingly difficult. According to a typical household now needs to earn $118,530 annually to afford a median-priced home of $402,500 in the U.S. — more than 50% above the national median income of roughly $77,700. But while owning a home may feel out of reach for many, it's now easier than ever to start investing in real estate thanks to crowdfunding platforms like Arrived. Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you'd like to purchase, and then sit back as you start receiving any positive rental income distributions from your investment. For investors seeking monthly dividends, the platform also offers the Arrived Private Credit Fund, which allows you to invest in short-term loans that finance real estate projects, such as renovations, property rehabs or even new home construction. The fund generates cash returns by collecting interest payments on the loans and distributing monthly payouts to investors. All of the loans are secured by residential housing as collateral, so even if the borrowers default, the underlying property can be sold to keep the fund healthy. Historically, the Arrived Private Credit Fund has paid 8.1% annualized dividends to investors. For those interested in tapping into home equity instead, Homeshares offers accredited investors access to the $35-trillion U.S. home equity market — a space that's historically been the exclusive playground of institutional investors. With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property. With risk-adjusted target returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets. What to read next Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 simple ways to grow rich with real estate if you don't want to play landlord. And you can even start with as little as $10 Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
RNZ News
a day ago
- Business
- RNZ News
Accountants call for capital gains tax
Photo: RNZ A group representing more than 3000 accountants in New Zealand has called for a rethink of the tax system, including the introduction of a capital gains tax. CPA Australia has made a submission in response to Inland Revenue's long-term insights briefing, which warned that tax would need to increase in the coming years. The organisation agreed with Inland Revenue on many of the pressures on the New Zealand system, including an ageing population that would mean fewer working taxpayers, and higher pension and healthcare costs. Productivity was also a problem, along with the cost of living and AI potentially changing how people worked. It said the country's tax base was narrow with a heavy reliance on income tax and GST, which make up the bulk of the tax take. It said the absence of a capital gains tax put pressure on the other taxes. It suggested adding a CGT, land tax and even GST changes to help recalibrate the tax mix, as well as indexing tax brackets to inflation so that people's tax bills did not increase over time when their income was only keeping pace with inflation. CPA said it was also worth considering making KiwiSaver compulsory, means-testing super and providing more tax incentives for retirement savings, such as a model in which contributions and returns were not taxed. The chair of CPA's New Zealand Tax Committee, Angus Ogilvie said unless there were significant changes to the way superannuation was set up, there were clear issues around a long-term structural deficit. "We are not bringing in sufficient revenue to cover the cost of the existing welfare system and running the government, which is problematic. One option is to increase economic growth, which will bring in more revenue as a result but one wonders whether that alone will close that gap." He said New Zealand had long been described as a "broad-based low rate tax system". "For many years it was just that. The base was fairly comprehensive and the rates were relatively low. But now the top personal tax rate has gone to 39 percent, I don't think anyone could argue that is low. The company tax rate is one of the highest in the OECD. We argue that we aren't that low rate, nor are we broad-based. "With a couple of exceptions, we don't tax capital gains in New Zealand, that's quite unusual in the OECD context. Pretty much every OECD country has some for of CGT, Australia certainly does but New Zealand does not. If we want to broaden that base, we need to consider a CGT." He said CPA was suggesting it should apply to assets purchased from a certain date, so that it was not retrospective. "The downside is it would take some time before it realised a reasonable amount of revenue but we acknowledge that you have to start somewhere. The alternative is to put all assets into that net but that would verge on impossible. "You have to value all those assets, some of them are easy to value, like property, but you can imagine a small business, valuing the assets in terms of what it would sell for in an active market, if it's a specialist business it's difficult to ascertain without a property valuation process. That's always been a very valid criticism of a CGT. "If it's based on assets that are purchased after a particular date then it becomes very easy." He said the superannuation settings needed to be revisited, but it was a political question that was difficult for politicians to deal with. "Universal provision of super for everyone over the age of 65 is very expensive. It's not means tested in any way - in Australia it is." He said something would need to be done. "I don't think there's anyone who seriously believes going to get on top of structural deficit issue unless the economy grows and that doesn't seem to be happening spontaneously so what other options have we got?" He said putting GST up was another option, but it would hit lower-income earners hard because they spent a greater proportion of what they warned. That could require an adjustment to welfare settings. CPA was not in favour of a wealth tax because it could prompt people to shift wealth to other countries without such a tax. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Times
3 days ago
- Business
- Times
Will my partner pay tax on the property he inherits from me?
Q. I am a widow and own a house which is mortgage-free, worth about £350,000. I also own a rental property, mortgage-free, that I bought in 2013 for £108,000 and it is now worth about £185,000. In my will I would like to leave this rental property to my partner. He doesn't live with me but owns his own house worth about £300,000 and his pension income is about £25,000 a year. If I die tomorrow I am concerned about what capital gains tax might be payable by either my estate, or my partner. I have urged him to keep the property, and not sell, because it gives good rental income. He is not likely to make it his main There are two taxes at play when someone dies: inheritance tax (IHT) and capital gains tax (CGT). Looking at the IHT position, the properties in your estate are worth £535,000, and you do not specify what other assets you own that would increase the value of your estate further. Everyone gets an allowance of £325,000 to pass on free of IHT. This is called the nil-rate band. In addition, if your estate is worth less than £2 million, you may also qualify for the residence nil-rate band of £175,000. However, this second allowance is only available if you leave your main residence to direct descendants, such as children or grandchildren. You have not mentioned whether you have any, but this would be a key factor in determining whether the residence band applies. Given that you are widowed, if your late husband did not use either of his allowances (perhaps, for example, because he left everything to you and assets left to spouses or civil partners do not trigger IHT), then those allowances could be transferred to your estate. In that case, you may be able to pass on a maximum £1 million free of IHT. This would comprise £650,000 to be set against your general estate and £350,000 against the value of your main residence, assuming that you left it to direct descendants and that your estate was not worth more than £2 million. • Should you help your children to buy a home? Your executors will need to claim any allowances transferred from your late husband in a form called the IHT400. If no transferable allowances are available, then your executors will need to pay the IHT due on the value of the estate that exceeds your IHT allowances. Under CGT rules, there will be no tax due when you die. Instead, your properties would be revalued to their market value at the date of your death and be passed to your beneficiaries. So, if your rental property was worth £185,000 at the time of your death, your partner would inherit it at that value and no CGT would be payable because no capital gain would have been made. If he then sold the property later, he could be liable for CGT on any profit made over £185,000, assuming he never occupies it as his main residence. He would have an annual allowance of £3,000 to offset against any gain and would pay CGT at a rate of either 18 per cent or 24 per cent depending on his rate of income tax. It's also worth highlighting that if and when he owes any CGT on the sale of the property, he would need to declare the gain and pay the tax within 60 days of completion through HMRC's CGT system, which is separate to the self-assessment return. Kate Aitchison is a private client tax partner at the accountancy firm RSM UK. She advises on succession planning, investment structuring and tax residency
Telegraph
4 days ago
- Business
- Telegraph
Labour's farm tax architect calls for fresh capital gains raid
The adviser behind Labour's inheritance tax raid on farmers has called on Rachel Reeves to raise capital gains tax to plug gaps in public finances. Arun Advani, of the left-leaning Centre for the Analysis of Taxation think tank, said that the Government should 'start by fixing capital gains tax' if it wanted to 'tax wealth better'. It comes as business secretary, Jonathan Reynolds, ruled out Labour MPs' 'daft' demands for a 'magic wealth tax', urging backbenchers to 'be serious'. The Chancellor has already raised the rate of capital gains tax to 24pc for higher rate taxpayers, and 18pc for basic rate taxpayers. But Mr Advani, an economics professor at the University of Warwick, told the Mail on Sunday that Labour could double its tax take if it brought capital gains tax in line with income tax. He said: 'The current way capital gains tax is used encourages tax avoidance. If the Government were looking at taxing wealth better, it would be much better to start by fixing capital gains tax.' Labour ministers have previously admitted that Mr Advani's research formed the basis of the inheritance tax raid on farms. The economics professor, who also sits on the advisory board for the Office for Budget Responsibility, wrote a report in 2023 calling for agricultural property relief and other 'loopholes' to be scrapped. A year later, in her maiden Budget, Ms Reeves announced that inherited farms worth more than £1m would be taxed at a rate of 20pc after having been shielded from the levies for decades. A 20pc rate will also be charged on inherited business assets over £1m when someone dies. Mr Advani has since urged Labour to go further and halve agricultural property relief to £500,000. Shadow business secretary, Andrew Griffith, told the Mail that capital gains tax was 'a wealth tax by another name', and that the tax further punished people 'on the higher inflation Labour is causing'. It comes as official figures show a sharp drop in capital gains tax receipts following successive cuts to allowances, suggesting they have backfired. Data published by HM Revenue & Customs (HMRC) on Friday showed the Government's capital gains tax take fell by 18pc to £12bn in the 2023-24 financial year, as the Conservatives halved the annual tax-free allowance to £6,000. HMRC suggested receipts in 2024-25 would drop a further 10pc to £13.1bn as a result of the allowance being cut again – to £3,000. Sarah Coles, of wealth manager Hargreaves Lansdown, said there was 'a decent chance that an awful lot of investors were just sitting on gains'. She added: 'It's a classic example of tweaking a tax in order to raise money – and then ending up with less in the long term.' Critics argue that increasing capital gains tax would undermine the Chancellor's drive for economic growth by discouraging investment. Jason Hollands, of wealth manager Evelyn Partners, said: 'If taxes on gains are seen to be too punitive, people will conclude the rewards aren't worth the risk, which would undermine the economy.' However, the OBR predicts capital gains tax receipts to almost double over the next five years to £25.5bn by 2029-30. Laith Khalaf, of stockbroker AJ Bell, said: 'Receipts largely reflect selling activity in the previous tax year, and plenty of people took fright ahead of last October's Budget and decided to sell up, in case of a capital gains tax raid. 'As things turned out, the Chancellor's changes to capital gains tax for individuals were relatively modest, but those who disposed of assets at a substantial profit ahead of the Budget will still be on the hook for capital gains tax, especially now the annual amount of gains you can make before paying the tax has been cut to just £3,000.' The Treasury was approached for comment.
Daily Mail
6 days ago
- Business
- Daily Mail
Labour's farm tax guru plots new raid on capital gains to plug £30bn black hole
Labour's favourite tax guru has renewed calls for a raid on capital gains to help plug an estimated £30 billion hole in public finances. Arun Advani, who heads the Centre for the Analysis of Taxation think-tank and devised the hated family farms tax, says changes to the levy are an obvious way to raise cash from the richest people and would be more productive than a separate tax on wealth. But critics say the proposals would instead drive away businesses and investors. And data last week revealed previous moves to raise more money from the levy had led to a sharp fall in tax receipts. Capital gains tax (CGT) is charged on the profit someone makes above a threshold when an asset they own, such as property or shares, is sold. CGT raised £12.1 billion in the 2023-24 tax year but Mr Advani thinks that could be doubled if capital gains were taxed the same as income tax. A 40 per cent higher rate taxpayer is charged 24 per cent on capital gains, whereas a 20 per cent basic rate taxpayer pays 18 per cent CGT. 'The current way CGT is used encourages tax avoidance,' says Mr Advani. 'If the Government were looking at taxing wealth better it would be much better to start by fixing capital gains tax.' Left-wing backbenchers are pushing Chancellor Rachel Reeves to consider a wealth tax of 2 per cent on assets worth more than £10 million. But Business Secretary Jonathan Reynolds says: 'We won't do anything daft like that.' Mr Advani says changes should include not only equalising rates of CGT with those of income tax, but also introducing an investment allowance, which would encourage people to back businesses. Two ministers said Mr Advani's research was key to the decision to charge inheritance tax on farmland worth more than £1 million, indicating his views hold considerable sway with the Government. Shadow Business Secretary Andrew Griffith said last night: 'CGT is a wealth tax by another name, especially as it taxes people on the higher inflation Labour are causing. 'Arun Advani should be hiding in shame, not dreaming up new ways for this socialist Chancellor to set fire to the wreckage that remains of the economy on her watch.' Experts say equalising CGT with income tax risked driving more entrepreneurs abroad and hitting economic growth. 'A move to increase CGT rates, even harmonising these with income taxes, would go against the Chancellor's aims of boosting growth and investment,' said Jason Hollands, boss of wealth manager Evelyn Partners. HMRC last year said raising CGT by 1 per cent would raise £200 million a year, 'tiny in the scheme of government finances', while a 10 per cent rise would cut tax receipts. 'If taxes on gains are seen to be too punitive, people will conclude the rewards aren't worth the risk, which would undermine the economy,' said Mr Hollands. HMRC data showed previous efforts to raise money from the levy had backfired. CGT receipts fell 18 per cent to £12.1 billion in the 2023-'24 tax year. Receipts are forecast to have fallen another 10 per cent for the 2024-25 tax year. Levy could cost firms £10bn A new wealth tax could deliver a hammer blow to businesses before even a penny is received by the taxman, top law company Vardags has warned. Its accountants estimate UK businesses would see up to £10 billion added to costs every year as they would have to pay bean counters to check if assets were valued highly enough to fall within the tax's scope. The bill would include legal costs arising from disputes with HMRC if there was disagreement over how much assets were worth. This would be paid before the taxman received anything from the levy. 'Between the high cost of compliance, and the potential for tens or even hundreds of thousands of disputes arising from valuations, a wealth tax could cost billions before a penny was received in revenue,' said Ben Crowne, a partner at Vardags. He said any system to enforce a wealth tax, particularly the two per cent levy on assets worth more than £10million backed by Left-wing MPs, would incur 'huge costs' and create 'enormous' loopholes that could be exploited by those with funds to do so.
