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Skipton Crash

Why Can't A Mansion Tax Apply Across Your Entire Portfolio?

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I am desperately in favour of a mansion tax, but surely it should apply to the total value of your property portfolio, including any buy to lets. It would be a great way to generate some money from fat cat landlords, and very few people would complain. Such landlords could not just raise rents to compensate because there would be plenty of other landlords who would not have to pay the tax, so tenants would be protected from landlords just passing on the costs en masse.

They should then plough 100% of the money into building affordable housing (social rent or open market)...

Should raise a lot more money!!

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I can see where you are coming from. However surely it is best and easier just to have a tax on the value of your land (not the house that is crazy and encourages people to let their house detoriate, some of my neighbours have saved a fortune because their house was in a bad state of repair in 91).

http://www.landvaluetax.org/

After all a tax on a portfolio would avoidable (set up lots of companies).

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Your other problem is that BTL portfolios are classed as business assets.

So a "portfolio wide" approach might also suck up things like factories and workshops for genuine business owners.

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being in favour of a mansion tax means you are in favour of the govt nationalising people's houses... This goes against the entire philosophy of freehold property, and means that over time, you will give back the entire value of your house to the state and more.. You already pay a mansion tax when you buy your property - it's called Stamp duty... how many times do you think it's fair to tax houses ?

Want more housing stock ? - relax planning laws for existing houses, but please fight to preserve the green belt !

Agreed that buy to let is an evil concept and is essentially blocking people from buying their own homes by inflating prices out of reach of first time buyers...

Would you want no rental sector ? not really... a healthy rental sector is essential for labour mobility, but then again, so is keeping house transaction costs low. The Govt has done a good job with the stamp duty reform in helping labour mobility, and enabling labour mobility..

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being in favour of a mansion tax means you are in favour of the govt nationalising people's houses... This goes against the entire philosophy of freehold property, and means that over time, you will give back the entire value of your house to the state and more.. You already pay a mansion tax when you buy your property - it's called Stamp duty... how many times do you think it's fair to tax houses ?

Want more housing stock ? - relax planning laws for existing houses, but please fight to preserve the green belt !

Agreed that buy to let is an evil concept and is essentially blocking people from buying their own homes by inflating prices out of reach of first time buyers...

Would you want no rental sector ? not really... a healthy rental sector is essential for labour mobility, but then again, so is keeping house transaction costs low. The Govt has done a good job with the stamp duty reform in helping labour mobility, and enabling labour mobility..

I don't own a house (by choice). I assume that you do.

How many times do i think it's fair to tax a house?

Well, put it this way.

If i earn £100k more this year, i pay £42k more in tax.

If my stock portfolio earns £100k more this year, i pay £25-28k more in tax.

If your house price increases by £100k this year, you pay precisely nothing. If you sell your house for this additional £100k, your buyer is expected to pick up the tab through a pitifully small stamp duty, yet it is you who have gained the benefit.

How many times do i think it's fair to tax a house?

Just once.

When you sell it.

At the capital gains tax rate.

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I don't own a house (by choice). I assume that you do.

How many times do i think it's fair to tax a house?

Well, put it this way.

If i earn £100k more this year, i pay £42k more in tax.

If my stock portfolio earns £100k more this year, i pay £25-28k more in tax.

If your house price increases by £100k this year, you pay precisely nothing. If you sell your house for this additional £100k, your buyer is expected to pick up the tab through a pitifully small stamp duty, yet it is you who have gained the benefit.

How many times do i think it's fair to tax a house?

Just once.

When you sell it.

At the capital gains tax rate.

That is not a good idea it would reduce transactions and stop people moving.

BTW if my house were to go up £1million pounds all other houses would do the same so I would not actually gain money although of course FTB would be poorer.

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That is not a good idea it would reduce transactions and stop people moving.

BTW if my house were to go up £1million pounds all other houses would do the same so I would not actually gain money although of course FTB would be poorer.

What is it worth now? Say £400K for example. I argue you gain for it can be sold to money. Transactions should increase once the hpi complacency is broken.

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my point is also this: I buy 1 house, I am 1 house wealthy... when measured in houses, my wealth does not change... If the govt prints loads of money, and dilutes the currency, my house is worth more of the worthless printable bits of paper (called £), but I am still 1 house wealthy... I can't shave off bits of my house to pay tax...

CGT on primary residence would be a great way to freeze the labour market and send the economy back to the dark ages... It would also penalise divorcing couples and others who have to sell...

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my point is also this: I buy 1 house, I am 1 house wealthy... when measured in houses, my wealth does not change... If the govt prints loads of money, and dilutes the currency, my house is worth more of the worthless printable bits of paper (called £), but I am still 1 house wealthy... I can't shave off bits of my house to pay tax...

CGT on primary residence would be a great way to freeze the labour market and send the economy back to the dark ages... It would also penalise divorcing couples and others who have to sell...

Not particularly arguing for house taxes, but I like the way those in houses tend not to treat the destruction of savers positions (or denial of them taking advantage of much stronger money vs house prices) via QE printing as being quite acceptable against their houses vs threat of any move against their inflated wealth housing.

QE just as much a denier of markets to stagnation of economy, sitting down on one group to protect another, all too often who had already being magnificently rewarded by HPI before more QE reflation.

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CGT on primary residence would be a great way to freeze the labour market and send the economy back to the dark ages... It would also penalise divorcing couples and others who have to sell...

No sure this would be the case. The vendor would still get to keep 72% of their "profit" for to acquire their next house....it would just reduce the differential between the various "strata2 of houses. They have CGT on houses in the USA I believe (Boris Johnson just got hit with it as he is a US citizen) - their labour market seems to function OK.

Why would it penalise people "who have to sell" - they would only be paying a tax on the profit; just as you do when you sell shares, a business or other investments.

It would actually be a very "fair" tax to collect as the liability would only arise on sale (so therefore there would be cash available to meet the liability) and also easy to track as the Land registry could require that they saw evidence that the tax had been paid over to HMRC before registering the sale.

What it would do is equalise the tax treatment across investment classes so that people would not be advised (like I was when I was younger) to buy the largest house possible with the biggest mortgage as your residence is the most tax effective investment you could make (especially when MIRAS was still around). I believe that this impact does contribute to the "hoarding" of large houses.

Edited by Exiled Canadian

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What we need is less government interference in housing, not more. If our population was not increasing so much through immigration, planning regulations were relaxed and government props such as HTB were removed, then the price of homes would stop getting up and more would get built.

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What is it worth now? Say £400K for example. I argue you gain for it can be sold to money. Transactions should increase once the hpi complacency is broken.

But if someone owns a house that is worth £x a rise to £2x is not so great because if they sell it then they they have to buy or rent another property so it would not help them. However if they own £x of shares and it rises to £2x then they are laughing.

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What we need is less government interference in housing, not more. If our population was not increasing so much through immigration, planning regulations were relaxed and government props such as HTB were removed, then the price of homes would stop getting up and more would get built.

Very true although of course we do need some taxes so why not a Land Value Tax - not transaction taxes.

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No sure this would be the case. The vendor would still get to keep 72% of their "profit" for to acquire their next house....it would just reduce the differential between the various "strata2 of houses. They have CGT on houses in the USA I believe (Boris Johnson just got hit with it as he is a US citizen) - their labour market seems to function OK.

Why would it penalise people "who have to sell" - they would only be paying a tax on the profit; just as you do when you sell shares, a business or other investments.

It would actually be a very "fair" tax to collect as the liability would only arise on sale (so therefore there would be cash available to meet the liability) and also easy to track as the Land registry could require that they saw evidence that the tax had been paid over to HMRC before registering the sale.

What it would do is equalise the tax treatment across investment classes so that people would not be advised (like I was when I was younger) to buy the largest house possible with the biggest mortgage as your residence is the most tax effective investment you could make (especially when MIRAS was still around). I believe that this impact does contribute to the "hoarding" of large houses.

Suppose you have two people who earn the same amount throughout their lives and want to live in similar priced houses. A LVT would mean that they both pay the same amount. Transaction taxes would mean that if one had to move a lot more than the other then they would be a lot poorer.

Why is this a good thing? I know life isn't fair but why make it unfairer than it needs to be. Also normally we tax things we don't want a lot - why is moving house a bad thing that should be punished like smoking?

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If CGT were 100% (minus actual improvements) then nobody would care. Why should we be chasing a situation where housing is expensive?

The only people who want HPI to be a living are people who are too lazy or useless to provide an actual service.

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Suppose you have two people who earn the same amount throughout their lives and want to live in similar priced houses. A LVT would mean that they both pay the same amount. Transaction taxes would mean that if one had to move a lot more than the other then they would be a lot poorer.

Why is this a good thing? I know life isn't fair but why make it unfairer than it needs to be. Also normally we tax things we don't want a lot - why is moving house a bad thing that should be punished like smoking?

LVT would replace transaction taxes. Instead of a tax on transactions which may do the bad things you suggest, it's a tax on relative land rental values.

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What we need is less government interference in housing, not more. If our population was not increasing so much through immigration, planning regulations were relaxed and government props such as HTB were removed, then the price of homes would stop getting up and more would get built.

You can't have less government interference in the land-market - it is entirely a creation of government.

Without government interference, anyone attempting to claim exclusive use of land would just be ignored, and landlords could not exist.

This interference might be a necessary evil, it might not, but there's just no point discussing the land 'market' unless you recognise what it is.

In this case 'less interference' means no interference with the landed, maximum interference with everyone else.

A land-value-tax is just the bill for services received by landowners. Everyone else pays their own bills, why shouldn't they?

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LVT would replace transaction taxes. Instead of a tax on transactions which may do the bad things you suggest, it's a tax on relative land rental values.

Exactly, which is why I think LVT is a good idea. A mansion tax is not the same as LVT (you could fall into Mansion tax by having a loft conversion).

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Exactly, which is why I think LVT is a good idea. A mansion tax is not the same as LVT (you could fall into Mansion tax by having a loft conversion).

I misunderstood your post. No they're not the same but a mansion tax is a step in the right direction because it forces a return of unearned income to the taxpayers who created the windfall. A house is a depreciating asset, it's the land that appreciates so it's still functionally applying the collection of revenue from land rental values rather than incomes.

There's a simple way to avoid concerns over liability, with a loft conversion or not; lower selling prices so that the sum of mortgage/rent + tax is a constant. This is what would/will happen anyway and if that's a problem it infers people just want free money which is not a concern I care much about.

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Suppose you have two people who earn the same amount throughout their lives and want to live in similar priced houses. A LVT would mean that they both pay the same amount. Transaction taxes would mean that if one had to move a lot more than the other then they would be a lot poorer.

Why is this a good thing? I know life isn't fair but why make it unfairer than it needs to be. Also normally we tax things we don't want a lot - why is moving house a bad thing that should be punished like smoking?

CGT targets unearned value creation. In your example if person A bought a house for £100 and when he died it was worth £900 he would (assuming CGT were payable on the sale of the house by the estate which is not now the case) pay GCT on £800 (or at least his estate would).

If person B buys his first house for £100, then sells it for £400 and buys another for the same price, then dying when the house is worth £900 he will still pay CGT on £800 of gain [(400-100)+(900-400)].

That not to say I don't agree with you wrt to a LVT being better.

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