Wealthy foreigners who own property in the UK may have to pay capital gains tax when they sell, under plans being considered for Chancellor George Osborne's Autumn Statement.
Charging CGT on non-resident property sellers would bring the UK into line with many European countries.
UK residents already pay CGT, at between 18% and 28%, on the proceeds of second homes sales.
The move could prove controversial because it would also catch out thousands of British expats who still own property in the UK. They could end up paying CGT if they sell their property while living overseas.
Deputy Prime Minister Nick Clegg is said to be behind the proposals, in a bid to ensure the wealthy foreigners who own British property pay their fair share.
The government also hopes to prevent a property bubble in the capital, as money pours in from investors all over the world, attracted by London's safe haven status and easy tax regime.
Foreigners now buy half of all prime London properties.
The capital's property market is said to be "unsustainable" after asking prices recently rose £50,000 in a single month.
But the British Property Federation has previously warned that plans to tax foreign property owners could damage the UK's status as a country that is open for business, without dampening house prices.
The move is more political than financial, with the proposed CGT charge expected to raise less than £100 million.
Clegg said the UK is an open economy and "doesn't want to pull up the drawbridge". “But we certainly want to make sure that people who invest very large amounts of money into properties in central London locations, which more often than not then stand empty, pay their fair share of tax on those transactions.
“That’s why we are looking at options like the differential application of capital gains tax to those kinds of transactions. Decisions on that haven’t yet been made.”
The Treasury refused to comment.
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