ERROR RG P4 18.2.1995 A business story in Thursday's edition of The Royal Gazette on property changes outlined in the 1995 6 budget statement incorrectly referred to lawyer Mr. John Cooper as Mr. Peter Cooper.

From a new capital gains tax to closing a loophole in home conveyances and abolishing land tax bill discounts, Government yesterday announced property-related budget measures to generate $3 million in revenue.

The 1995 6 budget, announced yesterday by Finance Minister the Hon. David Saul, includes a 10 percent capital gains tax for non-Bermudians selling their homes.

"We have already had non-Bermudians calling us (about the tax),'' said Ms Chris Faldes-Dapena, chairman of the real estate division of the Chamber of Commerce.

"The affect can only be negative. ..it is disappointing,'' she commented, because this tax will no doubt increase the price of the house as owners attempt to recoup some or all of the amount by hiking the "for sale'' price.

And increased prices means decreased demand, according to Ms Faldes-Dapena.

The news raises questions about whether money which has been put into the house for renovations can be deducted, or if part or all of the licence fee can be deducted, she said.

In some jurisdictions home owners can deduct costs associated with improvements to the house from capital gains taxes and in some they cannot, according to Ms Faldes-Dapena.

Non-residents pay 20 percent licence fees to buy homes or are subject to a licence fee of 15 percent for a condominium.

Only about the top 250 houses on the Island are for sale to non-Bermudians.

The rationale for offering this select group of homes is to promote wealthy individuals coming to the Island, noted Mr. Arthur Jones, president of Jones Waddington Ltd.

Govt. to collect more from home owners Government has also announced it will collect more tax on voluntary conveyances.

Giving your home to a relative before you die or putting it in a trust will cost more now as taxes will be applied to the full value of the house, not just the equity.

For example, a house may have a value of $750,000 and be mortgaged to the amount of $500,000 with $250,000 in equity. Now Government will collect stamp duty on the $750,000 where before they collected tax only on the $250,000.

But it is still cheaper to give your house away before you die, according to lawyer Mr. Peter Cooper who said he has received a copy of all stamp duty changes in the 1995 budget.

The death tax on a home valued at over $1 million for example is up from ten percent to 15 percent whereas the voluntary conveyance tax on that property is up from four to five percent.

The difference used to be six percent but now it is ten.

Government has closed this "loophole'' due to what Dr. Saul said was a "great deal of abuse.'' Government, which collects money through land tax demand notes early in the year and at mid-year, also announced it will "abandon the discount previously extended on payment of land tax, as this feature of the tax is no longer considered appropriate. However, there will be no increases in land tax rates.'' Depending on the average rental value, property owners had garnered a discount anywhere from $15 to $1,000 by paying their land taxes early, according to Mrs. Heather Matthews, Accountant General. But come mid-year that will come to an end.

Government also intends to amend the tax on lease agreements on residential properties with rental values of $1,200 or more per month. The revised tax will range from $75 to $300 and replace the current flat rate of $50.