Deputy pushes for capital gains tax on second homes

Friday 13 September 2024

A backbench Deputy is calling for a 20% capital gains tax on profits made from selling second or additional residential properties to help bolster the island’s ‘rainy day’ fund.

Deputy Max Andrews wants to see such a tax introduced on any homes that are not main residences from 1 January 2028, and is calling for States Members to back his bid to get the Treasury Minister to bring forward legislation by June 2027.

In a report explaining the reasons for his proposal, Deputy Andrews explained that the Strategic Reserve – a back-up fund used in exceptional circumstances – "is forecast at 17 percent of Gross Value Added for 2027, when it should be somewhere between 30 to 60 percent".

He said this means the government is more inclined to turn to borrowing due to the Fund value being insufficient, which could increase national debt.

Pictured: Deputy Max Andrews.

The Deputy argued that the States Assembly will be unable to increase the value of the Fund using existing revenue streams, and that there therefore will be little choice but to introduce new taxes to increase government revenue to ensure transfers can be made to the Fund.

He argues that substantial capital gains currently being achieved remain untaxed and a tax on the capital gain of additional homes means the government would generate additional revenue from an appreciating asset to supplement transfers to the Fund.

The Deputy also suggested this could create more opportunities for first-time buyers, with investors being disincentivised to invest in the housing market.

States Members are currently expected to vote on the proposals on 1 October at the earliest.