OFFSHORE companies that buy prime London homes for investment purposes will be exempt from forthcoming property tax hikes, the government announced yesterday.
Many wealthy foreign individuals have avoided stamp duty by setting up a company for the sole purpose of buying a high-end property. They will still be hit by a 15 per cent stamp duty rate on homes worth over £2m, as well as an annual levy starting at £15,000 for property worth between £2m and £5m.
But the Treasury said genuinely commercial investments in prime property – such as for buy-to-let purposes – will be taxed at the seven per cent stamp duty rate and be exempt from the levy.
Capital gains tax at 28 per cent will also be extended to non-resident foreign owners selling homes worth over £2m. Almost all the affected properties are in London and the south-east.
Naomi Heaton, chief executive of asset manager London Central Portfolio, said many foreign owner-occupiers will still chose to buy through a corporate structure and pay the new 15 per cent rate due to “inheritance tax savings and personal privacy.” She added: “This levy is likely to be accepted as part of the investment cost.”