New Property Tax Proposed For The Isle of Man

by Jason Gorringe, Tax-News.com, London

23 February 2005

Profits from the sale of property may soon be subject to income tax in the Isle of Man under a new proposal contained in the Income Tax Amendment Bill 2005, according to a local media report.

The Bill, which will seek to tax any profits obtained from the disposal of land, is aimed mostly at taxing the profits of property speculators, according to the Isle of Man Online news service, although the exact scope of the tax seems to be unclear at present.

Those who sell property after having owned it for less than five years are most likely to be hit by the new levy, according to the report, although it is understood that a number of clauses within the legislation will protect the majority of residential property sales from the tax.

One of the most important of these clauses will reportedly allow individuals to avoid the tax if they can prove to the Assessor that they have been forced to sell their property as a result of unforeseen events, or other circumstances beyond their control.

Other exemptions will be put in place for: property and land previously owned by the deceased; land left in wills; and the proceeds from property sales due to individuals no longer resident in the Isle of Man.

According to tax experts, the new tax is designed to affect those who derive income from successively improving properties and selling them on for a profit.

“What they are looking to get is the person who will move into a property, do it up to market condition and then sell it on for a profit and that profit is their way of making a living,” explained Kevin Cowley, head of tax at Deloitte Isle of Man, according to the IoM Online report.

“They will also target people who are snapping up properties for buy-to-let and large corporates who are holding land claiming it as capital gains when it is disposed of,” Mr Cowley added.

The Royal Institute of Charted Surveyors is due to meet next Wednesday to discuss the implications of the proposed tax on the jurisdiction’s property market.

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