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arrgee1991

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Everything posted by arrgee1991

  1. In the wake of September 2008 I expected a crash, but the act of setting very low interest rates stopped it and prices recovered quite quickly. The crash in the early nineties arose due to rising unemployment after it had hit a low around 1988 along with the removal of MIRAS. That one effectively lasted eight or nine years. http://www.housepricecrash.co.uk/forum/index.php?showtopic=23983 I don't know what will cause property to crash in London now. The lack of supply seems to be the main issue. Unless the population falls significantly or there is a major house building programme, there may be some flattening, but I don't see big falls.
  2. There are any real wealth taxes bar IHT, which when you die you won't care too much about. Taxes like CGT can by and large be avoided on stockholdings using ISAs and the £11K annual allowance to bed and breakfast. CGT wasn't often paid on second homes due to flipping, but there have been moves to stop that. It is wrong that employment is taxed higher than unearned income which in turn is taxed more than wealth.
  3. Those who MEWed in London in the last six years or so have done far better than those who downsized. Low interest rates have encouraged it. Now that may not continue indefinitely, but there seems to be little appetite from the UK government to increase rates.
  4. Moving costs are a reason to not move no matter what level the downsizing is. Even with a crash to 50% of current values and the abolition of Stamp Duty, the fees and other costs are still significant. Two million may plan to downsize, but far less will do it.
  5. Moving home is pretty stressful, people are more likely to have made friends over a number of years where they currently live so why go through all the bother? Stamp duty always looks bad.
  6. Even with no stamp duty the cost of moving is expensive. People may plan to downsize to release the value in the bricks and mortar, but rarely go through with it. Downsizing a property to ensure a married couple's assets are worth less than £650K is the real benefit for those who inherit the estate. I see a future where mortgage deals will be available to people over 75, who will make the payments from their annuity/drawdown income or alternatively just take equity release as they still won't have paid off their original mortgage.
  7. Aside from reducing IHT liability, it doesn't make much sense to downsize. Moving from a £1million property to a £600K property costs £24K Stamp duty, £12K Estate agent fees (assuming 1% +VAT) and probably another £4K in various other costs. So that is £40K off the £400K "profit".
  8. Exactly. Plan to downsize to make money then upon realising how much it will be for all the costs, fees and taxes, decide to stay put. Most likely downsize is a couple of 8' * 2'6" * 6'
  9. Should they do this and just 5-10% of the BTL properties are found to have undeclared income it will probably lead to mass selling of BTL properties to pay the tax and a crash. Would also be interesting if they looked into sales and CGT due at the same time. Good. There was another interesting point that there are a number of landlords who are just on PAYE and don't complete tax returns. Amazes me that HMRC are forever chasing the likes of me for pretty insignificant sums (less than £1000, though once the investigations are done they end up owing me as I originally calculated). There are bigger sums to be chased, it just seems like they can't be bothered if it isn't on the self assessment form.
  10. With other salary sacrifice benefits, it is possible to earn more. Benefits such as childcare vouchers, life assurance, income protection, buying a bike etc. are all available. Oddly private medical is not included. I'm sure a salary of £80,000 along with salary sacrifice to take it down to less than £50,000 can be achieved. Might need to open a bike shop a few years down the line though. Once you hit optimum salary and maxed out benefits, pay rises could take you back into the 65% marginal rate. I suppose at that point you can make charitable donations. I don't believe income is the whole story in making repayments. My income has fluctuated wildly over the last twenty five years. Sometimes it is high and sometimes low. Due to a high income the last time I was house hunting (ultimately unsuccessful) I was able to borrow up to £500K. I doubt I'd get £200K on my current income, but could easily afford the interest payments on far more with pensions and other investments put aside to pay the capital if required.
  11. The punitive tax rates often result in a lower tax take. Anyone earning between £100K and £120K is likely to put everything over £100K into a pension, so rather than the government getting 75% of the money (Tax + Employer/Employee NI + allowance clawback) they get nothing. Likewise for those with kids earning between £50K and £60K. The higher the tax rate the lower the yield. The office of budget responsibility have assessed the impact of the child benefit changes and found that withdrawing Child Benefit for higher rate taxpayers did not save the anticipated £1bn per year. Due to "behavioral changes" the savings are considerably less. And this did not factor in the money paid into pension funds that no longer attracts tax. Before changes for two child family Tax paid = £4,200 plus £1,380 Benefit obtained = £1,750 Government gain = £3,380 After changes Tax paid = £0 Benefit obtained = £1,770 = Government loss
  12. Students borrow £27K with no income. They are compelled to. Income is not the whole story. What is important is that people are able to make the interest payments and pay off the capital at the end. I'd rather lend to someone with a £500K pension pot and low income than someone with no pension pot and a high income. With the former I am highly likely to get paid when they retire, whilst with the latter once their income is impacted, I could end up with nothing. The income measure is too crude. A graduate from medical school may have a low income but future income is likely to be high, whereas an IT contractor may have high income at present, but if their skills are outsourced, they need to re-train meaning lower income in the future.
  13. It is only £8/annum that gets taxed at 58%. Still an incentive to keep taxable income below £41,450. Hate to think that I only get £3.36 of that. I find it funny that the 50% tax was so hotly debated when over 5 million effectively pay that now.
  14. They do where higher rate tax becomes payable. There is a spike at the point between the higher rate becoming payable and the subsequent reduction of NI of 58% http://www.telegraph.co.uk/finance/economics/10602490/Imagine-the-explosion-of-growth-if-we-got-serious-about-tax-cutting.html Earnings above £7,717 are briefly taxed at a rate of 12.1pc; above £7,769 this jumps to 22.7pc; then the combined tax rate shoots up to 40.2pc from £9,440, briefly reaching 57.8pc above £41,450; it then falls back to 49pc from £41,558; rockets to a bonkers 66.6pc from £100,000; falls back again 49pc from £118,880 and then settles at 53.4pc from £150,000.
  15. Optimum gross income for someone with two children is £77,000. If you contribute the maximum annual allowance of £40,000 to your pension, you end up with £50,000 taxable once the Employers NI is factored in. Not sure how the mortgage providers would view that though. On one hand you would be building up a very sizable pension pot that would easily pay off the capital, yet on the other the new rules would probably count against you in making the repayments. That said not sure what you can get with an income of £77K in London these days. Glad I have an interest only mortgage.
  16. If you have two children and take the £10,000 you would have earned and put it into a pension then with the accompanying employers NI you get £9,673 out with zero growth turning a 64.58% tax rate into a 3.27% tax rate. You can just borrow the £4,030 you would have got at less than 5% interest if the shortfall bothers you. As you drawdown your pension you can pay off all the loans. http://www.housepricecrash.co.uk/forum/index.php?showtopic=197767&page=2 IN £10000 gross £4030 net - (£4200 tax + £1770 cb) £11380 with employers NI OUT £2845 tax free £8535 taxed at 20% = £1707 £6828 £9673 £4030 makes £9673 - 140% gain
  17. David Cameron: Taxes will rise unless we can raid bank accounts Now I am scared.... http://www.telegraph.co.uk/finance/personalfinance/10819885/David-Cameron-Taxes-will-rise-unless-we-can-raid-bank-accounts.html
  18. Stamp Duty stealth has meant a high cost of moving, so people tend to stay put. There aren't too many discretionary sales at the higher prices so many are due to death, divorce and debt. The only other factor that comes into play are people selling out of good primary school catchments to move to secondary school catchments. I read a letter in the London Evening Standard the other day where a marrying couple have not sold the places they currently own in order to buy together due to the cost, presumably living in one and letting the other. The "reduce/abolish" Stamp Duty Thread ()
  19. They haven't shown the back garden. Probably has a shed with a bed. That will be allowed to stay as no PP required.
  20. It is expensive to downsize. Moving down incurs all the moving costs associated with moving up. Selling a £1m property to move into a £600K property will cost over £40K when all fees and taxes are considered. In effect you lose 10% of the potential gain. I don't believe people are refusing to downsize, it's just that they lack any incentive to do so.
  21. It always has. This was the case back in 2001 when I bought for £250K. Properties would go up for sale on Friday and have a few offers on Monday all at £250K and no more. The house I bought was up for £280K, but I made the £250K offer which was initially turned down. After a few weeks of no viewers and probably after the EA advised them we could move very quickly the offer was accepted.
  22. I totally agree with this. Nowadays people move less. I don't know how true it is (as it's the Daily Fail), but apparently the average homeowner now moves once every 22 years, compared to once every eight years in the 1980s, according to recent research by the property firm Hometrack. http://www.dailymail.co.uk/news/article-2611281/Semi-detached-homes-three-bedrooms-Britains-sought-properties-say-estate-agents.html#ixzz2znfsiQ80
  23. The comment regarding death was in response to the sale of larger family homes, and down the years many are sold upon death and divorce. Divorce is less of a factor these days, but death including those taken into care is one of the main drivers behind sales of larger family home. Stamp duty does not matters to these sales as the owners have no need to purchase hence they still take place. Removing stamp duty would allow those who wish to downsize to do so at a lower cost. Removing stamp duty would mean people who wish to relocate to a property costing exactly the same don't have a large tax bill. Removing stamp duty will increase supply. The short term effect could be increased prices as people have more to spend on houses but once volumes start to increase then it is likely that prices will fall. Lack of supply, particularly in London, is a cause of HPI. My belief is that the removal or at the very least the reform of stamp duty would increase the supply and should reduce prices. But this government is unlikely to change stamp duty given revenues of £5-£6 billion/annum. http://www.cityam.com/article/1398300902/uk-deficit-comes-down-tax-revenues-creep-higher Stamp duty was a particularly supportive revenue for chancellor George Osborne during the year: receipts rose to £1.1bn in March, 44.5 per cent higher than in the previous year. Over the whole 12 month period, revenue from the house sale tax was up 37.2 per cent.
  24. This is The "reduce/abolish" Stamp Duty Thread, so that's why I am focusing on that. Stamp Duty is a cause among others like easy credit and low interest rates. How much impact it has I don't know, but if it were abolished, then supply would increase.
  25. Maybe, but what evidence can I provide? I can't take these things in isolation and prove them. Death (or expected death) is a big reason, if not the main one, for sales of bigger properties. Stamp duty reduces supply, so if it were removed supply would increase and it is probable prices would fall as a consequence. There are far too many variables to prove any of this in isolation.
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