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fru-gal

Tories edge towards the tax they dare not name

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https://www.thetimes.co.uk/edition/comment/tories-edge-towards-tax-they-dare-not-name-6x7hml03d

Quote

Mr Hammond has also made clear that the Conservatives’ priority, if they retain power, will be to see the “burden of tax on working people reduced”, a clear statement of priorities. According to Whitehall insiders, the chancellor thinks it is “unfair” for wealthy people to be able to build up huge assets, which they then pass on to their children while expecting the taxpayer to pay for their social care.

Hmm. I wonder if the rumour about CGT on main homes has some truth to it...

Edited by fru-gal

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47 minutes ago, iamnumerate said:

I hope not, increasing taxes on owning homes would be fairer than taxes on moving home although I doubt it would be politically acceptable.

CGT would be a tax on ownership. It would make you pay for the increase in value you have received from local improvements / government policies etc.

If it replaced inheritance tax and stamp duty I would be all for it.

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55 minutes ago, CunningPlan said:

CGT would be a tax on ownership. It would make you pay for the increase in value you have received from local improvements / government policies etc.

If it replaced inheritance tax and stamp duty I would be all for it.

You could avoid it by not moving which would reduce liquidity in the market.  Much better to abolish stamp duty etc and replace with an annual tax on the value of the home.  (It would be welcomed by landlords about as much as S24).

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14 minutes ago, iamnumerate said:

You could avoid it by not moving which would reduce liquidity in the market.  Much better to abolish stamp duty etc and replace with an annual tax on the value of the home.  (It would be welcomed by landlords about as much as S24).

But you don't need to avoid it, as it only reduces your profit, not your original capital.

If you made £100k profit but only got £70k of it to add towards a bigger profit I don't see that it will cause the market to halt any more than CGT does.

Must also be payable on death though to be effective.

 

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1 minute ago, CunningPlan said:

But you don't need to avoid it, as it only reduces your profit, not your original capital.

If you made £100k profit but only got £70k of it to add towards a bigger profit I don't see that it will cause the market to halt any more than CGT does.

Must also be payable on death though to be effective.

 

The problem with CGT is that if your main home goes up in value the cost of replacing it goes up so you are not really richer.  It is not like an investment property.  In your example suppose John bought a house for £100k which is now worth  £200k and he wants to move to a similar house for some reason.  With CGT he has to pay £30k in order to sell his house and move to another one - this makes moving a lot more expensive - true if he doesn't move his heirs will have to pay it - but that is not his problem.

Much better to just tax owning property more - but not politically acceptable.

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1 minute ago, iamnumerate said:

The problem with CGT is that if your main home goes up in value the cost of replacing it goes up so you are not really richer.  It is not like an investment property.  In your example suppose John bought a house for £100k which is now worth  £200k and he wants to move to a similar house for some reason.  With CGT he has to pay £30k in order to sell his house and move to another one - this makes moving a lot more expensive - true if he doesn't move his heirs will have to pay it - but that is not his problem.

Much better to just tax owning property more - but not politically acceptable.

That's a fair point. However it will also make more people realise that rising prices are not necessarily good.

I would like tax on property value but I can't see it being acceptable or enforceable. This is much easier and quicker to apply.

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Just now, CunningPlan said:

That's a fair point. However it will also make more people realise that rising prices are not necessarily good.

I would like tax on property value but I can't see it being acceptable or enforceable. This is much easier and quicker to apply.

Thank you, I think this would be even less acceptable as people would not be able to move from house to house, unless there was some sort of inflation subtraction.

I agree with you about helping people to realize that prices rising is not a good thing is to be desired.

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1 minute ago, iamnumerate said:

Thank you, I think this would be even less acceptable as people would not be able to move from house to house, unless there was some sort of inflation subtraction.

I agree with you about helping people to realize that prices rising is not a good thing is to be desired.

IIRC CGT used to have an indexation allowance.

I would also like to think that we won't see the kind of rampant HPI that we have recently in my lifetime and therefore your suggestion will raise much more money.

Whichever way, we need to move taxation away from earned income towards hoarded wealth.

 

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1 minute ago, CunningPlan said:

IIRC CGT used to have an indexation allowance.

I would also like to think that we won't see the kind of rampant HPI that we have recently in my lifetime and therefore your suggestion will raise much more money.

Whichever way, we need to move taxation away from earned income towards hoarded wealth.

 

I agree although not all hoarded wealth is equally bad. If I hoard gold I don't really affect others that much, hoarding houses though is another matter.

Hoarding medicines would just cause the drug manufactures to make more (unless they are selling them at a loss, which is unusual).

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Just now, GreenDevil said:

Ah maybe you are logged in?

Nope. Not sure if I can paste it here? Does anyone know if it is ok (I know the mods don't like FT articles being pasted but not sure about The Times)?

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I have no problem with CGT on principle as a speculation deterrent.

1 year full......5 years constant use as primary residence = none with 1/5 off each year

Any renovation costs deductible.

Not many folks are going to want to hold onto a house for more than 5 years to flip it? ie one payday every 5 years

What about the unfortunate family who buy a house and then have to sell to move jobs after one year?

can always sell for what they paid + costs?

Edited by Fromage Frais

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1 minute ago, Fromage Frais said:

Not many folks are going to want to hold onto a house for more than 5 years to flip it? ie one payday every 5 years

What about the unfortunate family who buy a house and then have to sell to move jobs after one year?

can always sell for what they paid + costs?

But with CGT they can't buy a new house because they won't have enough money.

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1 minute ago, Fromage Frais said:

I have no problem with CGT on principle as a speculation deterrent.

1 year full......5 years none with 1/5 off each year

Any renovation costs deductible.

Not many folks are going to want to hold onto a house for more than 5 years to flip it? ie one payday every 5 years

What about the unfortunate family who buy a house and then have to sell to move jobs after one year?

can always sell for what they paid + costs?

I have as people ho move for work, divorce will be penalised.

The rich/foreign money launderers who just use their house as a safety deposit box will continue to pay next to nothing in council tax.

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Just imagine if CGT announced but not phased in until say 12 months from now. Would reluctant sellers suddenly go bonkers to get sale done fast and start market moving? 

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8 minutes ago, iamnumerate said:

But with CGT they can't buy a new house because they won't have enough money.

Well as it stands now they would still be up shit street without a job and without knowing the differential between the ares they are moving to thats a variable thats not possible to quantify.

for example I can sell my house without capital gains and move to a job in London.......i dont have enough money to buy a nice house there.

With flipping and hoarding (where you buy multiple properties and then change your primary residence) you would expect houses to come down in price if you are of the mind BTL (being addressed) and speculation (CGT?) make up a good portion of the price you pay I think maybe around 20% or more in certain areas.


 

Edited by Fromage Frais

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6 minutes ago, Funn3r said:

Just imagine if CGT announced but not phased in until say 12 months from now. Would reluctant sellers suddenly go bonkers to get sale done fast and start market moving? 

Well in my search area the main kite fliers are vendors selling houses bought and fixed up for sale.

Those properties would most likely find a level faster.

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