We asked two top accountants, Colin Davison of Cranleys Chartered Accountants and principal accountant for Tax Assist, David Rodick to interpret the key points of the Chancellor's Budget as they affect property investors.

What do they both make of this 'steady as she goes' Budget and what opportunities, if any, does it offer up for the shrewd property investor?

To sum up, there were no real surprises in Alistair Darling's first Budget as Chancellor, and for the property investor, it merely confirmed what we already knew with capital gains tax (CGT) being slashed from 40% to 18%.
Good news for most investors but, as with anything, there are winners and losers.

With the cut in CGT, came the abolition of taper relief, which has been used as a highly successful tool for 10 years, as a way of reducing the amount of CGT paid when disposing of an asset. Depending on how long an asset has been held, it was possible to reduce CGT as low as 10%.

So, effectively, without the ability to use taper relief, for some, this could mean a hike of 80% in CGT from 10% to the new flat rate of 18%.

As a result there is no longer any incentive to hold onto assets for the long term and the Chancellor has been accused of encouraging short termism. So, good news for the risk taker who wants to buy and sell quickly but not so good for the long term investor.

When he announced the abolition of taper relief in his pre-Budget report last October, there was an outcry from the business world. In order to try and counteract this, Mr Darling announced the introduction of 'Entrepreneurs' Relief' which ushers in CGT of 10% on the first million pounds of assets.

The sixty four thousand dollar question then is whether, as a property investor, you qualify for entrepreneurs' relief and, unfortunately, the answer is as woolly as Alistair Darling's best herringbone jumper.

Basically it is worth taking some expert advice on this one.

Landlords are specifically mentioned as NOT being eligible for Entrepreneurs' Relief but it is all down to how you choose to define yourself, which is where tax planning, and that all-important professional wisdom, comes into play.

Overall, Colin Davison is upbeat, saying that, despite the Budget being dubbed 'safe' and 'dull', in terms of property investment it is anything but.

He explains: "Believe it or not, this is a Budget which encourages investors to take risks. Thanks to the slash in capital gains tax, any property which is bought now can be disposed of in a few years' time without the inherent CGT burden which could have been a prohibitive factor before."

Ultimately, for property investors, it is the changes to CGT which are the headline news from this Budget, but according to David Rodick there are a number of other, less well known issues behind the headlines which are worth knowing about.

"One change in the Budget which many people will not have picked up on is the extension of zero stamp duty on carbon neutral flats,' said David.

'Whilst fulfilling the Government's intention to encourage homes of the future to be environmentally friendly, this also offers a real financial incentive for property developers.

"Another area which may have been overlooked by many is the transfer of properties within partnerships which will now be completely stamp duty free. This is definitely something which could be taken into consideration when tax planning."

This will come as a double helping of good news for husband-and-wife partnerships who were bracing themselves for the introduction of measures to stop them splitting their income to reduce joint tax bills. Despite a threatened clampdown, Mr Darling postponed any action until next year.

And the good news doesn't end there.

David goes on: "For investors who use something called property authorised investment funds or 'Property AIFs', they will now be able to elect to be exempt from one point of taxation.

"Despite being highly lucrative for many investors, Property AIFs were previously liable for two points of taxation but, thanks to the Budget, investors will now be able to make a considerable tax saving."

So all in all, it's good news for property investors then?

Colin seems to think so. "It really is a buyer's market right now - the adage of 'buy in winter, sell in spring' could be adapted to 'buy now, sell later' for the current market - but the principle is the same. With the property market largely stagnant, purchasing power has never been greater and there are some great deals to be done with the advantage of reduced CGT for further down the line."

And David agrees, saying: "Overall there are some very positive messages to be taken from the Budget but the devil is in the detail. Nothing is black and white and this is where getting professional advice comes into its own in order to maximise the benefits and minimise the potential pitfalls."

But what of the view that the cap gains taxation changes will simply encourage many BTL landlords to get out of the market in these uncertain times.

Not so, says survey results from the Money Centre, one of the UK's largest buy-to-let mortgage brokers.

"Our most recent research among buy-to-let landlords shows that the majority regard their investment as a medium to long term strategy." said Lynsey Sweales, marketing and PR director of The Money Centre.

"Twenty two per cent of those interviewed anticipated holding on to their properties for between 11 and 20 years with a further 19 percent intending to stay in the market for anything from six to ten years.

"Only 13 per cent of landlords said they were likely to sell any letting property in this current quarter and so, while the reduced capital gains tax rate will definitely benefit investors eventually, I think a rush to cash in come next month is unlikely given most landlords are committed to a longer term strategy."

Both Colin Davison and David Rodick offer expert tax advice to property investors. Email colin.davison@cranleys.co.uk or visit

www.taxassist.co.uk/davidrodick for more information