Mansion Tax Could Hit 775500 Homes

Mansion Tax Could Hit 775500 Homes.

Projected figures by London based estate agent Knight Frank has suggested that the Mansion Tax could affect three quarters of a million homes within 25 years.

Figures have yet to be agreed but the mansion tax is speculated to apply to properties worth £1.7m to £2m plus, and could be levied at 1.5% to 2% per annum. Suggesting that a home valued at £2m, could have a yearly mansion tax of £40,000.

Currently, the mansion tax would affect around 55,000 homes but if the threshold was frozen at £2m or increased in line with inflation and property prices continue to rise in the South East above the rate of inflation, up to 775,500 homes could be affected within 25 years.

Comment

Given austerity and the government’s moves to tax the wealthier or those that buy up London property but do not live here, we see Mansion Tax being a reality and no doubt a back door route via Mansion Tax and probably increased council taxes as an easy revenue target.

Many countries in Europe have a wealth tax, and we see the UK moving towards the same.  We had a Windows Tax in the 18^th century for the luxury of how many windows you had, Mansion Tax will come and be here to stay.

More than 775,000 homes will be affected if plans to introduce a mansion tax on properties worth over £2m are implemented.

A study by Knight Frank suggested that 775,500 properties would be subject to the tax during the next 25 years if property prices continue to rise at current levels. This compares with 55,000 homes worth more than £2m today.

It said the tax would generate around £1.3bn each year and that 86.4% of the affected properties were located in London and the South East.

Labour and the Liberal Democrats have been supportive of proposals to introduce a mansion tax and the former expected its introduction to generate £2bn for the government.

Knight Frank has now suggested this prediction was too optimistic and that all properties worth more than £1.25m would need to be included to raise such a sum.

Liam Bailey, head of research at Knight Frank, said: "Our calculations point to the real threat of the mansion tax threshold being lowered substantially in order to meet the revenue targets of the political parties.

"Even if the threshold is not lowered, it seems a fair assumption - given that it has remained at £2m since 2009 - that it would not be raised in line with future house price inflation thereby substantially increasing the number of properties affected by the tax."