The UK will soon have tax-efficient property investment trusts if the Chancellor of the Exchequer Gordon Brown follows through on industry expectations and announces the new measures in next month’s budget.
The move will come after years of consultations between the government and the property industry and could be modelled on the American Real Estate Investment Trusts, or REITS.
Should this be the case, then the property trusts will not be charged tax on their income if a high proportion (typically 50% to 60%) of their earnings is distributed to investors.
According to the investment bank Morgan Stanley, the UK’s property stocks have already seen a significant boost due to speculation that REITS are about to be introduced. Last year, shares in property firms leapt by 27% and the bank sees the trend continuing over the coming eighteen months.
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