TaxCorporate TaxPBR05: Mixed day for property investors

PBR05: Mixed day for property investors

Real estate investment trusts get go ahead, but planning development supplement now a definite

It was mixed PBR day for property companies and investors, as Gordon Brown
gave the go-ahead for real estate investment trusts (Reits) but also confirmed
that the touted planning gain supplement would be implemented.

Phil Nicklin, real estate tax partner at Deloitte who served on the working
group advising on outstanding tax and legal issue on Reits, welcomed the
greenlight for Reits.

‘I am obviously delighted. The government looks like it will be adopting the
exempt model for Reits, so there will be no tax levied on rental income and
investment capital gains,’ said Nicklin.

The PBR announced that draft legislation for Reits would be included in the
2006 finance bill and said that details of the tax proposal would be published
before the end of the year.

The planning gain supplement, a tax on gains made by acquiring planning
permission for a site and developing it, however, was now certain to be
introduced.

‘The planning gain supplement has been extended to include non-residential
property in addition to residential property. The opening of the consultation
shows the intention to introduce this. It will affect all property developers,’
said Nicklin.

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