Just when you may have thought things couldn't get worse for local families wanting to buy a home along comes something with the potential to make housing here even less affordable.The rules about self invested pensions will change next year and anyone with a big enough income to justify one of these will be able to buy a second home as a pension assett. All the tax saving rules about pension contributions will apply so they can renet it out tax free and even avoid capital gains tax so long as the profits go into the pension fund. They will even be able to borrow to buy to the tune of 50% of what is already in the fund. The effect is that someone buying a £300,000 flat and paying tax at the 40% rate only needs to find £180,000 with the tax break covering the rest. If there is enough in their pension fund they can borrow this, rent the place out and cover the mortgage from rental, paying no tax on the rent.It will of course be possible to invest in a Tuscan Villa but the compexities of international tax regimes make it a lot easier to buy in the UK.What a wonderful example of joined-up government when they are pretending to encourage more low cost housing! -- Posted by Anonymous to swanage view at 7/03/2005 06:03:02 PM
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