Taxes overload on budget

Taxes are a nightmare for most people, especially for those who aren’t used to paying them. However, like almost everything else, there are both negative and positive aspects of a new tax and, if implemented correctly, taxes can be highly beneficial for the welfare of the nation. Well, the time to ponder over taxes is upon us once again. The Budget 2016-17 is currently being drafted and will be presented in June as usual. While it may bring several positive changes in government spending, it seems like property investors are preparing for stifling developments. According to sources, property transactions will be taxed at 5% for tax filers and at 8% for tax non-filers. This kind of tax rate can be rather burdensome for hefty property transactions and significantly hinder investment activity. However, if our nightmare becomes a reality (which it probably will), property investors can still live with the help of an oxygen mask. It may not be the time yet to count their last breaths. So how will the new property tax to be announced soon influence the real estate market? Here is my take on it. Less property flipping One of the activities causes property real estate prices to escalate is property flipping. Property flipping involves an investor vigilantly investing in an option for a short period of time, quickly selling it off when they realise a profit, and then buying something else almost immediately. This kind of frequent activity causes an escalation in investor activity, which consequently drives up prices. However, as the tax rate for each property transaction will now be rather high, property flipping may decrease noticeably. While this can be a positive aspect and keep rates affordable for genuine buyers, it will harm investor and estate agent profits.

Share this post