Reforming UK Tax System
Discussion
PurpleMoonlight said:
I would love it to be deemed just somewhere to live, but everybody buying a home expects to make a profit on it when they come to sell and they will unless something drastic changes. Also, because it's tax free many people invest in their home rather than a pension scheme or other investments.
I suggest part of the housing crisis we have now is because of the favorable tax treatment of PPR's.
Look at the prices of houses in France compared to UK. Do they enjoy the same tax benefit?
(genuine question, I don't know whether they do or don't)
Many people in France and indeed much of Europe, rent their homes rather than buying them. I suggest part of the housing crisis we have now is because of the favorable tax treatment of PPR's.
Look at the prices of houses in France compared to UK. Do they enjoy the same tax benefit?
(genuine question, I don't know whether they do or don't)
Justayellowbadge said:
PurpleMoonlight said:
Justayellowbadge said:
There's a tiny, outside chance that it may have a slightly adverse impact on anyone moving house.
Why?You get offered a job elsewhere in the country.
You want to move to another 250k house in that new location.
When you sell your house you have to give the revenue 30k.
You can now only afford a 220k house.
You don't take the job.
The CGT exemption for PPR is anomalous. I am strongly in favour of retaining it and not introducing asset taxes, but nevertheless it seems to me to be something that ought logically to be abolished before asset taxes are introduced. Political suicide to propose it.
Justayellowbadge said:
PurpleMoonlight said:
Justayellowbadge said:
Yes, I can see how forcing those filthy property owning rich entitled scum in their ostentatious 2 bed starter homes to borrow 30k to give to the government is a policy that will do so much for the working class of the country.
What profit are you assuming they have made on their 2 bed starter home to arrive at your £30,000?I purchase a house for £150,000. Assuming it increases in value by 4% each year, and in 6 years I decide to sell for around £190,000. I've "made" £40k, but anything I want to buy is also give-or-take 25% more expensive than it was 6 years prior. If I want to avoid the tax, I have to move to a smaller home. Why?
PurpleMoonlight said:
Justayellowbadge said:
You live in a 250k house.
You get offered a job elsewhere in the country.
You want to move to another 250k house in that new location.
When you sell your house you have to give the revenue 30k.
You can now only afford a 220k house.
You don't take the job.
So buy a £220,000 house or increase your mortgage by £30,000.You get offered a job elsewhere in the country.
You want to move to another 250k house in that new location.
When you sell your house you have to give the revenue 30k.
You can now only afford a 220k house.
You don't take the job.
It might help reduce the cost of housing.
In New Zealand there's some kind of law in place that caps the amount of profit you can make on selling a property for something like three years after you buy it
romeogolf said:
I can't follow this argument.
I purchase a house for £150,000. Assuming it increases in value by 4% each year, and in 6 years I decide to sell for around £190,000. I've "made" £40k, but anything I want to buy is also give-or-take 25% more expensive than it was 6 years prior. If I want to avoid the tax, I have to move to a smaller home. Why?
You have realised a profit on a property sale. Why should it be tax free?I purchase a house for £150,000. Assuming it increases in value by 4% each year, and in 6 years I decide to sell for around £190,000. I've "made" £40k, but anything I want to buy is also give-or-take 25% more expensive than it was 6 years prior. If I want to avoid the tax, I have to move to a smaller home. Why?
PurpleMoonlight said:
You have realised a profit on a property sale. Why should it be tax free?
Because the profit is not of benefit if I require the funds to purchase an equivalent home elsewhere. It's not a 'nice to have' item, like art or wine - It's a home. A second home is different as it does not leave the owner potentially without a home if it is sold and tax is paid on the sale.romeogolf said:
Because the profit is not of benefit if I require the funds to purchase an equivalent home elsewhere. It's not a 'nice to have' item, like art or wine - It's a home. A second home is different as it does not leave the owner potentially without a home if it is sold and tax is paid on the sale.
You are still expecting special tax treatment of a particular asset that you chose to acquire.If someone chooses to rent and invest in equities instead, they pay tax on realised gains (after GCT allowance) even if they want to invest the proceeds somewhere else.
Within a certain demographic there is much criticism of the elderly 'hogging' homes with some arguing they should downsize to free up properties that are too big for their needs.
If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
romeogolf said:
I can't follow this argument.
I purchase a house for £150,000. Assuming it increases in value by 4% each year, and in 6 years I decide to sell for around £190,000. I've "made" £40k, but anything I want to buy is also give-or-take 25% more expensive than it was 6 years prior. If I want to avoid the tax, I have to move to a smaller home. Why?
You are in this situation anyway because of stamp duty.I purchase a house for £150,000. Assuming it increases in value by 4% each year, and in 6 years I decide to sell for around £190,000. I've "made" £40k, but anything I want to buy is also give-or-take 25% more expensive than it was 6 years prior. If I want to avoid the tax, I have to move to a smaller home. Why?
You would pay £3,800 in stamp duty on your new house (assuming you buy a property of equivalent value to the sale price of your old one).
If CGT on primary residences was set to a flat rate of say 10% and stamp duty were abolished - you would only pay £2,870 in CGT on the sale of your old home.
Shakermaker said:
Many people in France and indeed much of Europe, rent their homes rather than buying them.
Only Germany, Austria and Denmark have lower home ownership rates than the UK according to this:https://en.wikipedia.org/wiki/List_of_countries_by...
Justayellowbadge said:
Within a certain demographic there is much criticism of the elderly 'hogging' homes with some arguing they should downsize to free up properties that are too big for their needs.
If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
Surely it would be better to tax the profit made after they've housed themselves?If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
So say 250k for a 2 bed pad would leave 475k taxable?
I think lot of people of that demographic would be okay with paying it, social responsiblity was more of a thing 50 years ago than it is these days.
Justayellowbadge said:
Within a certain demographic there is much criticism of the elderly 'hogging' homes with some arguing they should downsize to free up properties that are too big for their needs.
If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
Perhaps not if the introduction of PPR CGT was coupled with the abolition of IHT.If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
I despise IHT,
PurpleMoonlight said:
Justayellowbadge said:
Within a certain demographic there is much criticism of the elderly 'hogging' homes with some arguing they should downsize to free up properties that are too big for their needs.
If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
Perhaps not if the introduction of PPR CGT was coupled with the abolition of IHT.If they had bought for 25k in 1975, say, that home could very easily now be worth 750k or so.
CGT on 725k, or stay put?
Let me think....
I despise IHT,
But now you are saying downsize and pay huge amounts of tax, or stay put and pass it on tax free. Even more reason not to sell.
PurpleMoonlight said:
Justayellowbadge said:
As do I.
But now you are saying downsize and pay huge amounts of tax, or stay put and pass it on tax free. Even more reason not to sell.
£750,000 house value and no IHT?But now you are saying downsize and pay huge amounts of tax, or stay put and pass it on tax free. Even more reason not to sell.
Besides, you can leave up to 850 tax free currently if the estate includes the family home.
I would scrap Council Tax and introduce some kind of...I don't know, lets call it a 'Community Charge' where everyone pays the same for the councils services of Fire Service, local police, social care, libraries etc.
Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
Edited by Fastchas on Friday 28th April 15:12
PurpleMoonlight said:
As for changes, I don't see why PPR's should be CGT exempt.
So that the workforce can afford to move to where they are needed. I'd go further and eliminate stamp duty on ppr. Secondly in a rising market it would make moving up the ladder almost impossible trapping families in unsuitable housing. Horrible idea. Sorry.Fastchas said:
I would scrap Council Tax and introduce some kind of...I don't know, lets call it a 'Community Charge' where everyone pays the same for the councils services of Fire Service, local police, social care, libraries etc.
Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
Yep same here.Why should Mr & Mrs X next door pay less than me in a 3 bed semi but with 4 kids, using more of the services, whereas I might live in a 4-bed house with the wife but pay a higher band? Will the Fire Service get to my house faster if they are both on fire? Will the police pay more attention to my burglary complaint?
We are both paying for EXACTLY the same service, why would one be charged more?
And when next door's kids reach 18/get jobs they will have to pay as well, which considering most kids stay at home till well in their 20's isn't a bad thing.
We probably pay the most council tax on our lane - despite using the least amount of services and only having comparable incomes to our neighbours.
Most of our neighbours also have kids - some grown up and earning, but still living at home.
But because our property has a higher theoretical and unrealised value - we have to pay more?
I'd love to see a 'community charge' introduced.
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