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i have had a debate with a friend for quite a while now - to cut a long story short, her and her husband have made a 'profit' on the house they have lived in of about £250k over the last 7 years - apart from basic decorating they have done nothing to earn this money at all - like millions, they pay no tax on this as it is the family residence - as a 'high' earner, i have worked my backside off for the same period and paid a small fortune in tax - she thinks as a high earner i should pay much more tax because 'you can afford to' - now the SNP seem to want property owners to pay even less tax but lump the tax burden more onto earners - this is the same policy as the libdems want in England (thankfully they are unelectable)

my view is it's about time people who have made a small fortune from the increase in the value of property and have done nothing to deserve it started paying their fair share of tax and that we started removing the burden from people who actually do something productive for their money - i suggest we introduce capital gains tax of 40% on the sale of all houses with immediate effect

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i have had a debate with a friend for quite a while now - to cut a long story short, her and her husband have made a 'profit' on the house they have lived in of about £250k over the last 7 years - apart from basic decorating they have done nothing to earn this money at all - like millions, they pay no tax on this as it is the family residence - as a 'high' earner, i have worked my backside off for the same period and paid a small fortune in tax - she thinks as a high earner i should pay much more tax because 'you can afford to' - now the SNP seem to want property owners to pay even less tax but lump the tax burden more onto earners - this is the same policy as the libdems want in England (thankfully they are unelectable)

my view is it's about time people who have made a small fortune from the increase in the value of property and have done nothing to deserve it started paying their fair share of tax and that we started removing the burden from people who actually do something productive for their money - i suggest we introduce capital gains tax of 40% on the sale of all houses with immediate effect

Given that you put 'profit' in quote marks I presume it's purely on paper at the moment? CGT would only be due once they crystallised the profit (and then didn't roll it over into a new property).

I have no strong views either for or against CGT on homes, to be honest. I do think that if CGT were charged, then to be equitable the costs of renovation, maintenance, decoration, HIPs, duties and fees etc. would have to be deductible.

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If people paid CGT on every house sale, nobody'd move as there'd not be enough profit/left over to enable them to buy a larger house (based on this being their objective).

Downsizers would be hit too as, after CGT, they'd be left over with just enough money to downsize and no pot of cash left over. So no point downsizing.

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If people paid CGT on every house sale, nobody'd move as there'd not be enough profit/left over to enable them to buy a larger house (based on this being their objective).

Downsizers would be hit too as, after CGT, they'd be left over with just enough money to downsize and no pot of cash left over. So no point downsizing.

There's a mechanism to deal with the first part. As for the second, I think you're right; it would deter retiring couples from selling, since to do so would be to crystallise a large CGT bill. Perhaps we'd see the emergence of a DTL -- downsized-to-let -- class :P

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If people paid CGT on every house sale, nobody'd move as there'd not be enough profit/left over to enable them to buy a larger house (based on this being their objective).

Downsizers would be hit too as, after CGT, they'd be left over with just enough money to downsize and no pot of cash left over. So no point downsizing.

no, house prices would fall as people wouldn't be able to pay the ridiculous sums being asked - and as a result downsizers would indeed be hit

my overall point is that many people have become wealthier without having lifted a finger to deserve it, whilst at the same time, people who get out of bed and earn a living are paying more and more tax

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One of the main problems with the UK economy is the lack of labour mobility. By introducing CGT this would make the problem a whole lot worse. Besides, assuming that someone doesn't STR in old age, they will pay 40% tax on their property - it's called inheritance tax.

Overall your suggestion would serve to weaken the UK economy and still result in the government receiving the same revenue. I am really having difficulty finding an upside to your argument aside from making you feel better!

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But CGT doesn't exist for your main home, only for those others you let out or use as holiday homes. So if you sell you don't pay any CGT, as you would be buying another in any case.

Where it all comes out in the wash is with IHT. You finally get to the point where you can't buy and sell your main house any more (because you're dead) and so the Government effectively takes that bit of profit back to give to the rest of us. It's called (or was called!) redistribution. Now they've run scared of the Tories and want to be more Tory than them we've even less chance of getting the true redistribution that this country needs. All the money goes more and more to those that already have it. So if you have wealthy parents you'll become wealthy because you'll inherit their estate.

It used to be argued in the 80s that this was all good, because ultimately all this wealth would trickle down to the poor, and in any case it made the world go round and the economy viable. But we've had 30 years of this hogwash, and yet it is still amazing how many people buy into this.

One question I've often thought to put on this site is: When house prices fall so you can get on the housing ladder, will you want to see HPI again so you can feel wealthy, or would you stick with the principles here that say low house prices benefit everyone? I'm not sure what sort of (honest) answers I'd get, but I wouldn't be surprised when we finally do get a crash to see it all pick up again.

It seems to be greedy is human. ('I'm alright Jack!' Now where have I heard that phrase before?)

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My initial rather flip reply to this was beacuse I assumed it was a troll. With collapsing pensions etc anyone who proposes CGT on PPR's wouldn't only not win any sort of election they'd be sent to a mental institution!

The poster does have a fair point re tax and, many years ago, there was a tax on property - it was called Schedule A and it was based (I think) on the rental value of property.

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I would like to get back to a position whereby a house is somewhere to live, not an investment - i'm fed up of people telling me how much money they have made on their house, how good an investment it is and yet they haven't paid any tax on it at all - if you brought capital gains tax onto main residences then the scope for massive profits would fall dramatically

I don't believe it would make any difference to mobility and people would only pay it on the 'profit' so no one would actually lose out from it - let's face it, there are enough complaints on here about 'fat cats' not paying enough tax - well at least they turn up to the office for a few hours a day

Basically lots of people have made lots of money they haven't earned and they aren't paying tax on - not particularly fair

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I would like to get back to a position whereby a house is somewhere to live, not an investment - i'm fed up of people telling me how much money they have made on their house, how good an investment it is and yet they haven't paid any tax on it at all - if you brought capital gains tax onto main residences then the scope for massive profits would fall dramatically

I don't believe it would make any difference to mobility and people would only pay it on the 'profit' so no one would actually lose out from it - let's face it, there are enough complaints on here about 'fat cats' not paying enough tax - well at least they turn up to the office for a few hours a day

Basically lots of people have made lots of money they haven't earned and they aren't paying tax on - not particularly fair

A lot of homeowners are paying plenty in interest to their lenders. If they are working to pay off the mortgage, how have they not earned it?

Edited by enworb
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i have had a debate with a friend for quite a while now - to cut a long story short, her and her husband have made a 'profit' on the house they have lived in of about £250k over the last 7 years - apart from basic decorating they have done nothing to earn this money at all - like millions, they pay no tax on this as it is the family residence - as a 'high' earner, i have worked my backside off for the same period and paid a small fortune in tax - she thinks as a high earner i should pay much more tax because 'you can afford to' - now the SNP seem to want property owners to pay even less tax but lump the tax burden more onto earners - this is the same policy as the libdems want in England (thankfully they are unelectable)

my view is it's about time people who have made a small fortune from the increase in the value of property and have done nothing to deserve it started paying their fair share of tax and that we started removing the burden from people who actually do something productive for their money - i suggest we introduce capital gains tax of 40% on the sale of all houses with immediate effect

I understand your sentiment, but dont we pay toooo much tax already? maybe drop the rate of the higher rate tax which would have the effect of creating more of everything, would it not?

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I don't see why property should be dealt with in any other way than that imposed on other un-earned profit. If you pay rent you get absolutely zero tax relief on anything. If you work hard and work overtime, or spend long hours building a business you get no tax breaks whatsoever. If you save money and invest it you pay tax on a substantial portion over the threshold. Why should property be any different? Why are people expecting as of right that they should move "up the ladder" just because they've been sitting on their bottoms waiting for some house to inflate in price. That is exactly why we have runaway HPI.

VP

Edited by VacantPossession
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A lot of homeowners are paying plenty in interest to their lenders. If they are working to pay off the mortgage, how have they not earned it?

What has interest got to do with it? To buy something on interest is a personal choice.

I am suggesting they pay tax on the difference between the buying and selling price. The gain that they have not worked for. This has nothing to do with whether or not they are paying interest. That would be yet another tax break for people who borrow.

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I'm sure there must be plenty of people that have been buying and selling houses for profit and paying zero tax on them. I know of people who have lived in more than 3 home per year for the last 7 years, making money at every move.

In theory such people should pay income tax on the profit made as it is actually income but because they are living in them before the sale then they avoid declaring the profits to the tax man.

I'm not clear on the rules but I bets there are 1000s of people doing this for a living and paying zero tax. But lets face it I've never known a period when property has made so much money in such short time, normally this wouldn't be possible.

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I do remember when I spoke to my accountant they said that if someone is moving often from property to property and using each as their primary residence to avoid tax, if they use the gains from each property to live off then they do need to pay tax on those earnings. The tax man will catch up apparently.

Also, there is no way any political party will introduce CGT on your primary residence, it would be political suicide. The rules havnt changed for primary residences (but they have for secondary residences or BTL) so the losers in this situation are the young, STR (in some cases) and some priced out individuals. Although I do think that the situation is soon to change across the UK as it already is in some regions.

At least the majority on this site have a good understanding of how the system works and therefore know how best to gain benefit from that knowledge.

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my view is it's about time people who have made a small fortune from the increase in the value of property and have done nothing to deserve it started paying their fair share of tax and that we started removing the burden from people who actually do something productive for their money - i suggest we introduce capital gains tax of 40% on the sale of all houses with immediate effect

If they have done nothing to deserve it, and it is that easy... why don't you do it too? Or... is it not that easy - and contradictory to your point?

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my overall point is that many people have become wealthier without having lifted a finger to deserve it

I dont think thats quite the point. Really the problem is just the CGT can be avoided in the case of a house. There are plenty of ways to make money without lifting a finger. I dont see many people here complaining that the large deposits they built up have paid out 6% without any work having to be done... heck put that in an ISA and you pay no tax. OMG money for nothing (and chicks for free).

And lets not get started on those that have "made" money by buying some shiny yellow metal stuff. Wow look at the value added productivity there!

Me think some people just like this argument as applied to houses because it suits the vested interest. But im cynical like that ;)!

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What has interest got to do with it? To buy something on interest is a personal choice.

I am suggesting they pay tax on the difference between the buying and selling price. The gain that they have not worked for. This has nothing to do with whether or not they are paying interest. That would be yet another tax break for people who borrow.

Seems as though you think my reply is ridiculous as I think your suggestion is. It's been mentioned thousands of times on HPC that many buyers pay far more than double the purchase price of their property because of interest. That's why I thought it was relevant.

The government already make a fortune from inheritance tax and stamp duty.

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I'm sure there must be plenty of people that have been buying and selling houses for profit and paying zero tax on them. I know of people who have lived in more than 3 home per year for the last 7 years, making money at every move.

And look at all the free cash those lazy STRs have banked!!! :P

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no, house prices would fall as people wouldn't be able to pay the ridiculous sums being asked - and as a result downsizers would indeed be hit

my overall point is that many people have become wealthier without having lifted a finger to deserve it, whilst at the same time, people who get out of bed and earn a living are paying more and more tax

Well, nothing's stopping you from getting into the property market yourself (apart from common sense) if you want to take advantage of the tax breaks on a primary residence.

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