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Millionaire Paul Daniels 'furious' At Paying Tax On Sale Of Second Home

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http://www.dailymail.co.uk/news/article-2581368/Paul-Daniels-136k-tax-bill-caring-mother-Magician-spent-thousands-adapting-home-facing-massive-capital-gains-tax-bill.html

http://pauldaniels.co.uk/capital-gains-tax/

Basically: Daniels bought a house in his own name for £150k in Denham in 1997, for his mother to live in. Now she's dead, he's selling it for £520,000 and will have to pay £136k CGT on it.

He's very upset on this because

"I have spent thousands on the property to allow her to remain in the home she knew,’ he said.

‘There were so many bars on the wall to help her cling to while she walked that we joked she could practise her ballet in the house."

and

'People will say “well you’ve made a lot of money on the house over the years, why not pay the tax bill”, but they don’t understand the amount I’ve spent and saved the government by providing for her.’

Personally I would have thought that one of the benefits of being millionaire Paul Daniels is that you don't have to put your mother in a government nursing home, and can afford to pay for her to live however you want.

And if the house was in her name she would have had to sell it anyway.

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Obviously someone else's fault.. perhaps society's fault (cmon Tomandlu... find some excuses).... for him not getting professional tax-advice years ago, and throughout the years, on this matter. He seems only to have recently discovered the workings of CGT. I mean.. who wants to pay a few hundreds of pounds of their own money on professional advice... when it's always pure HPI and happy days.

Looks to me like another clear example of another older person desperate for lower house prices so younger people can have a chance, who doesn't want to extract as much as possible from property.... as lectured upon by many on the forum is the absolute reality of things. :rolleyes:

The bungalow in Denham, Buckinghamshire, was bought by Daniels under his real first-name of Newton, for £150,000 in 1997. Property estimates for the area now value it at around £520,000.

If he bought it in her name, and gave her a loan for it, he probably still would have some IHT to pay anyway on her estate (on her behalf, on value of her estate, but maybe not as much as the CGT now owing)..

Edited by Venger

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Great isnt it. I dont have one home, let alone two, and get to pay tax on savings. yay.

Primary residences are the only asset you can build equity tax free.

Personally, id apply CG to them too. Dont see why one person who has x2 £100k homes should pay more in tax than someone who has one £1million home.

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Charging CGT on primary residences would be silly and unfair, since it would basically stop normal people from being able to trade up (after FTB status etc) since they would have no way to compete with those who have established wealth.

Say a 2 bed house costs £200k and a 3 bed costs £300k. You buy the 2 bed because you cant afford the 3 bed. After 5 years all prices have went up 20%, the 2 bed is worth £240k and the 3 bed is worth £360k. At the moment, you could use your £40k of HPI equity to put towards the 3 bed when you need a bigger house. But if you are paying CGT you only have £24k or so, and your options are much more limited.

CGT on primary residences would only be fair if you could deduct generic house price inflation. So if your house has (eg) went up 15% while the average house in your city has went up 10%, then you would only be liable for tax on the 5% you outstripped general HPI (in the same sense that we should really be allowing people to deduct general RPI inflation from their CGT liability on savings/investments)

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Charging CGT on primary residences would be silly and unfair, since it would basically stop normal people from being able to trade up (after FTB status etc) since they would have no way to compete with those who have established wealth.

Disagree. I think CGT on PPR is a highly sensible way of dampening HPI and removing the property ladder obsession from the British psyche. The social costs of HPI are offset by a contribution to the government's tax take. At the same time stamp duty should be abolished as this penalises the buyer not the seller and would offset the trading up effects that you raise. It would also allow the abolition of inheritance tax.

The final reform would be either a land or property value tax which would discourage unproductive property hoarding.

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There is (or was) a house in a very expensive private road not a million miles from here that I was convinced belonged to Paul Daniels. No evidence except for the name - Conjury Nook - who else would think of anything so naff?

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'People will say “well you’ve made a lot of money on the house over the years, why not pay the tax bill”

I am one of those people Paul.

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Charging CGT on primary residences would be silly and unfair, since it would basically stop normal people from being able to trade up (after FTB status etc) since they would have no way to compete with those who have established wealth.

Say a 2 bed house costs £200k and a 3 bed costs £300k. You buy the 2 bed because you cant afford the 3 bed. After 5 years all prices have went up 20%,

Absolute rubbish. 20% inflation over 5 years is silly and unfair.

As for Paul, poor man. I get taxed on my income don't people realise how hard I work to earn it? etc. etc. And I get taxed on my house by a private tax collector as well as by the state. (i.e. rent + CT)

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Charging CGT on primary residences would be silly and unfair, since it would basically stop normal people from being able to trade up (after FTB status etc) since they would have no way to compete with those who have established wealth.

Say a 2 bed house costs £200k and a 3 bed costs £300k. You buy the 2 bed because you cant afford the 3 bed. After 5 years all prices have went up 20%, the 2 bed is worth £240k and the 3 bed is worth £360k. At the moment, you could use your £40k of HPI equity to put towards the 3 bed when you need a bigger house. But if you are paying CGT you only have £24k or so, and your options are much more limited.

CGT on primary residences would only be fair if you could deduct generic house price inflation. So if your house has (eg) went up 15% while the average house in your city has went up 10%, then you would only be liable for tax on the 5% you outstripped general HPI (in the same sense that we should really be allowing people to deduct general RPI inflation from their CGT liability on savings/investments)

this is nonsense.

If you paid CGT on capital gains, all that would happen is the market equity total would become less, and the next "rung" house wouldnt have as part of its "value" the equity part of the lower "rung" house.

In other words, the purchase price possible would not be Equity+loan+cash, it would be Equity-CGT+loan+cash....in other words, every rung from the first upwards would fall in value by the CGT.

The effect on the mature market in actual volumes....NIL.

However, look at the effect on the same formula where lending is supported by schemes and lowering interest rates.

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I think there should be a tax on Paul Daniels.

Since when did Daniels become the everyman of the modern age? And why is the Mail obsessed with the man?

Flooding - bring on Paul Daniels. Tax - let's hear what Mr Magic has to say.

Don't get me wrong, I used to love his magic shows in the 80s, but I wish he'd just bugger off and play golf somewhere.

Edited by Danny Deflation

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I think there should be a tax on Paul Daniels.

Since when did Daniels become the everyman of the modern age? And why is the Mail obsessed with the man?

Flooding - bring on Paul Daniels. Tax - let's hear what Mr Magic has to say.

Don't get me wrong, I used to love his magic shows in the 80s, but I wish he'd just bugger off and play golf somewhere.

Count yourself lucky. A few weeks back Daniels had been hired by Northern Rail to 'entertain' commuters at Huddersfield Railway Station.

Edited by aSecureTenant

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Count yourself lucky. A few weeks back Daniels had been hired by Northern Rail to 'entertain' commuters at Huddersfield Railway Station.

Almost as cringeworthy as Cliff Richard doing his impromptu "entertainment" at Wimbledon a few years back.

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Oh I see. He bought the house for himself, not for his mother. She just got the use of it.

I was wondering why IHT threshold didn't kick in.

And I wonder if she paid tax on the benefit, or did she pay rent?

Paul, don't sell it - rent to some loser hard-working family.

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Is this the same Paul Daniels who 3 weeks ago was criticising the government (aka the taxpayer) for not shelling out to dredge the river at the bottom of his garden?

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'People will say “well you’ve made a lot of money on the house over the years, why not pay the tax bill”, but they don’t understand the amount I’ve spent and saved the government by providing for her.’

Nobody asked you to. Perhaps you should have told your mother you were only helping her out as a potential tax free investment for yourself.

Shocking how some people don't look at the outrageous gain but rather the modest amount of tax they pay on a profit from a price uplift which had nothing to do with their efforts.

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'People will say “well you’ve made a lot of money on the house over the years, why not pay the tax bill”, but they don’t understand the amount I’ve spent and saved the government by providing for her.’

Thats some tortuous logic there, maybe we should all have an account with the treasury and every time our actions could conceivably prevent a bill for the government our tax can be reduced to compensate? Why, only this morning I didn't vandalise any street lamps, nor did I get hit by a car and so saved the government a small fortune in maintenance, ambulance and hospital costs. I expect a reduction in my next tax bill. Uhoh, I didn't just dig up the road just now, they're going to owe me a fortune by the end of the day, I might retire.

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Charging CGT on primary residences would be silly and unfair, since it would basically stop normal people from being able to trade up (after FTB status etc) since they would have no way to compete with those who have established wealth.

Say a 2 bed house costs £200k and a 3 bed costs £300k. You buy the 2 bed because you cant afford the 3 bed. After 5 years all prices have went up 20%, the 2 bed is worth £240k and the 3 bed is worth £360k. At the moment, you could use your £40k of HPI equity to put towards the 3 bed when you need a bigger house. But if you are paying CGT you only have £24k or so, and your options are much more limited.

CGT on primary residences would only be fair if you could deduct generic house price inflation. So if your house has (eg) went up 15% while the average house in your city has went up 10%, then you would only be liable for tax on the 5% you outstripped general HPI (in the same sense that we should really be allowing people to deduct general RPI inflation from their CGT liability on savings/investments)

Unfair! HA.

what could be more unfair than people with all their wealth in primary residence not getting taxed, every other form of wealth getting taxed?

I think they do it in germany (at least if you dont hold it for long enough) and the world hasnt ended.

I've thought about the issues you raised before, and yes, id overhaul CGT a lot, namely by allowing the CGT allowance to be carried over and accumulated year to year, much like ISAs can be accumulated year on year, rather than this daft 'use it or lose it' approach that forces people to liquidate investments at the end of the tax year. If the residence was measured in two peoples/a couples names, the CGT allowance would thus be doubled, and at current prices allow for an annual £22,000 tax free gain. If HPI was equal to wage inflation or less (which must be the ultimate goal) you could have a million pound house appreciate £22,000 in a year and not pay tax. Anything over that, you pay. sounds like a pretty good incentive against speculative behaviour to me. Would only effect the average person/couple if HPI went into double figures, and, if they could see through daily mail headlines, would probably get broad support.

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It's a shame that Paul Dainiels' skill as a magician doesn't extend to making this hefty Capital Gains Tax bill disappear. :lol:

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