The Dutch Cap?

Interesting what you can learn and I wonder if this is something that everyone else knew about except me.

 

In my course in Bangkok this week, discussing International Financial Reporting Standards, we talked informally at one stage about the credit crunch, 100% - 125% mortgages and remortgaging.

 

There was a Dutchman on the course and he said that in Holland, anyone taking equity out of their property as a result, for example, of a remortgage and who did NOT put that money back into the property in the form of an extension, new kitchen, new garage, upgrading central heating and so on, would be charged income tax on the money as if it were income and not a capital flow of cash.

 

I wonder why we don’t do that in the UK as I think we don’t; and how effective it is at limiting/controlling equity release schemes. I also wonder if it made matters worse by encouraging borrowers to gross up their requirements so that they effectively borrowed enough for their needs and to pay the tax as well. That is, they want, say, £50,000 but take £60,000 to cover their £50,000 AND the £10,000 tax bill.

 

 

DW