This 50p tax rate

W1

Rick Chasey wrote:

W1 wrote:

Rick Chasey wrote:

DonDaddyD wrote:

Rick Chasey wrote:

I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.

There you go, rich people are the enemy.

That's not the enemy.

I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.

That's because you presumably have nothing of worth (be it financial, or of family significance) to inherit.

Some people have this quaint idea that they owe it to their families, previous and future, to maintain ownership of their homes to pass on. Some have been doing that for hundreds of years. Sometimes that can be a significant financial burden, regardless of the on-paper value. Being taxed on an asset that you own, but could not afford to buy, cannot (and should not have to) sell, and which you have made other sacrifices to keep, is something which I view as unacceptable. But that is something that I doubt you could understand.

Pfft, how presumptuous.

Suffice to say, it's happened to a side of my family and no-one seems either upset or bitter about it. In short the tied up wealth was liquidated.

Hardly presumptious - it's evident from your attitude to the topic.

bigmat

Greg66 wrote:

Rick Chasey wrote:

I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.

I'd be (genuinely) interested in your views on this.

I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.

If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.

Fair?

They could sell the house? Not unfair really, is it? Or would they rather the price of their house hadn't risen so much that it was caught by this mansion tax? Isn't that meant to replace council tax anyway (I could be wrong)?

MaxwellBygraves

Greg66 wrote:

gtvlusso wrote:

his birthright.

Uh-oh. There's an expression that should get the commies foaming at the mouth...

W1

MonkeyMonster wrote:

Greg66 wrote:

Rick Chasey wrote:

I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.

I'd be (genuinely) interested in your views on this.

I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.

If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.

Fair?

Is it not living beyond their means?

Well it would be if the envy, sorry mansion, tax was brought in.

The government are the only real winners of house price inflation and on-paper asset values - it's not surprising Cable wants to take a bit more.

W1

BigMat wrote:

Greg66 wrote:

Rick Chasey wrote:

I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.

I'd be (genuinely) interested in your views on this.

I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.

If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.

Fair?

They could sell the house? Not unfair really, is it? Or would they rather the price of their house hadn't risen so much that it was caught by this mansion tax? Isn't that meant to replace council tax anyway (I could be wrong)?

Being taxed out of your house is fair? Really?

DonDaddyD

Where is that atomic bomb smiley emoticon....

rick_chasey

W1 wrote:

BigMat wrote:

Greg66 wrote:

Rick Chasey wrote:

I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.

I'd be (genuinely) interested in your views on this.

I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.

If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.

Fair?

They could sell the house? Not unfair really, is it? Or would they rather the price of their house hadn't risen so much that it was caught by this mansion tax? Isn't that meant to replace council tax anyway (I could be wrong)?

Being taxed out of your house is fair? Really?

Presumably the capital gains tax includes the gains made on the price of your house?

greg66_tri_v2.0

Rick Chasey wrote:

Presumably the capital gains tax includes the gains made on the price of your house?

Don't get that. There's no CGT on your principal private residence.

rolf_f

I own my house; I consider myself very lucky. However, I couldn't even come close to affording to buy it now which is ridiculous. Whatever the reasons are for its current value, anything that encourages its value to stay as high as it is, is clearly not constructive in the long term.

I'd be quite happy for the ridiculous and useless paper value of my house to drop to a sensible level again (ie so that middle class people can afford a middle class houses like mine).

greg66_tri_v2.0

Rick Chasey wrote:

What's fair? That he has to sell the house?

It'd be the same for everyone in the same situation...

MonkeyMonster wrote:

Is it not living beyond their means?

BigMat wrote:

They could sell the house? Not unfair really, is it? Or would they rather the price of their house hadn't risen so much that it was caught by this mansion tax? Isn't that meant to replace council tax anyway (I could be wrong)?

Right.

Hands up who owns their own house.

Hands up who has their family (SO/offspring) living with them in that house.

Hands up who calls their house their home (as opposed to a short term prospect on the step ladder to something nicer and more long term).

rick_chasey

Greg66 wrote:

Rick Chasey wrote:

Presumably the capital gains tax includes the gains made on the price of your house?

Don't get that. There's no CGT on your principal private residence.

So there isn't?

So, say I buy a house fro £1m, and 5 years later sell it for £1.5m > I don't pay tax on my £500,000 earnings?

Christ, no-wonder everyone went house crazy.

greg66_tri_v2.0

Rick Chasey wrote:

Greg66 wrote:

Rick Chasey wrote:

Presumably the capital gains tax includes the gains made on the price of your house?

Don't get that. There's no CGT on your principal private residence.

So there isn't?

So, say I buy a house fro £1m, and 5 years later sell it for £1.5m > I don't pay tax on my £500,000 earnings?

Christ, no-wonder everyone went house crazy.

Correct - so long as you lived there as your ppl priv residence.

Although you'd pay £50k stamp duty on the purchase of your £1m house and £75k stamp duty if you spent your £1.5m on the purchase of another house. And estate agents' fees on the sale of your house at £1.5m - say 2% plus VAT @ 20% = £36k.

Kind of adds up...

rick_chasey

Greg66 wrote:

Rick Chasey wrote:

Greg66 wrote:

Rick Chasey wrote:

Presumably the capital gains tax includes the gains made on the price of your house?

Don't get that. There's no CGT on your principal private residence.

So there isn't?

So, say I buy a house fro £1m, and 5 years later sell it for £1.5m > I don't pay tax on my £500,000 earnings?

Christ, no-wonder everyone went house crazy.

Correct - so long as you lived there as your ppl priv residence.

Although you'd pay £50k stamp duty on the purchase of your £1m house and £75k stamp duty if you spent your £1.5m on the purchase of another house. And estate agents' fees on the sale of your house at £1.5m - say 2% plus VAT @ 20% = £36k.

Kind of adds up...

Well yeah, but if I invest my money in say, stocks, I also pay the middle man, but on any capital gain I make I pay 18%, unless I'm very much mistaken.

I wonder what the effect would be if you removed the inheritance tax, but replaced it with a capital gains tax.

So, say I inherent £5m worth of assets, I then get a £900,000 tax bill.

MonkeyMonster

Greg66 wrote:

Right.

Hands up who owns their own house.

Hands up who has their family (SO/offspring) living with them in that house.

Hands up who calls their house their home (as opposed to a short term prospect on the step ladder to something nicer and more long term).

Rent so none to the above. I meant more in that it would suggest it's also mortgage free too. So in effect they are living in the wrong place for the money stream they have coming in - they could never in 3 million years afford where they are. Selling the house and buying a 1.5 million place would net them money and they can still live rather comfortably just not where the gift house was... surely?

rick_chasey

Presumably also you inherit debt too?

So if your rents are in negative equity, die, and leave you to inherit everything you're also f*cked?

greg66_tri_v2.0

Rick Chasey wrote:

Presumably also you inherit debt too?

So if your rents are in negative equity, die, and leave you to inherit everything you're also f*cked?

No.

Say last surviving parent owns a house worth £100k and has total debts (bank, tax, credit cards etc) totalling £150k . He leaves everything in his will to his only child.

The child gets zero. The estate is insolvent: creditors prove for their debts. If the bank was owed £40k and had a mortgage, it would get 40k. The remaining 60k would be split between the remaining £110k of creditors, giving each just over 50p in the £. The creditors write off the balance of their claims.

The child doesn't inherit the debt. The debts are contractual. The contract(s) were with the old man.

greg66_tri_v2.0

Rick Chasey wrote:

I wonder what the effect would be if you removed the inheritance tax, but replaced it with a capital gains tax.

So, say I inherent £5m worth of assets, I then get a £900,000 tax bill.

The tax take would probably go down, I suspect.

Right now, the estate would be assessed for IHT on £5m less the £325,000IHT allowance at whatever rate IHT is at - 40% iirc. So the estate stumps up £1.87m.

MonkeyMonster

Greg66 wrote:

useful info

hence why in the past there have been cases of people taking massive loans/cc's out to cover families debts and then killing themselves?

rick_chasey

Greg66 wrote:

Rick Chasey wrote:

Presumably also you inherit debt too?

So if your rents are in negative equity, die, and leave you to inherit everything you're also f*cked?

No.

Say last surviving parent owns a house worth £100k and has total debts (bank, tax, credit cards etc) totalling £150k . He leaves everything in his will to his only child.

The child gets zero. The estate is insolvent: creditors prove for their debts. If the bank was owed £40k and had a mortgage, it would get 40k. The remaining 60k would be split between the remaining £110k of creditors, giving each just over 50p in the £. The creditors write off the balance of their claims.

The child doesn't inherit the debt. The debts are contractual. The contract(s) were with the old man.

Makes more sense that way.

Do you not think it's mental people don't pay CGT on their house?

Never owned one so never paid an enormous amount of attention, but that's crazy. No wonder there was a housing boom.

tailwindhome

Rick Chasey wrote:

Do you not think it's mental people don't pay CGT on their house?.

Steady on old chap.


I'm all for the rich taking a hit.....but that one might effect me.

bigmat

Greg66 wrote:

Rick Chasey wrote:

What's fair? That he has to sell the house?

It'd be the same for everyone in the same situation...

MonkeyMonster wrote:

Is it not living beyond their means?

BigMat wrote:

They could sell the house? Not unfair really, is it? Or would they rather the price of their house hadn't risen so much that it was caught by this mansion tax? Isn't that meant to replace council tax anyway (I could be wrong)?

Right.

Hands up who owns their own house.

Hands up who has their family (SO/offspring) living with them in that house.

Hands up who calls their house their home (as opposed to a short term prospect on the step ladder to something nicer and more long term).

Hand is up for the first two, don't quite get the third - they aren't mutually exclusive are they?

Torvid

BigMat wrote:

Greg66 wrote:

Right.

Hands up who owns their own house.

Hands up who has their family (SO/offspring) living with them in that house.

Hands up who calls their house their home (as opposed to a short term prospect on the step ladder to something nicer and more long term).

Hand is up for the first two, don't quite get the third - they aren't mutually exclusive are they?

I think what Greg66 is saying is who can't see themselves moving on from said house ever. I have friends that have been in the same house generations they all end up moving back to bring up kids there.

I should add they are farmers so the house tends to pass on to the person taking over the farm when they are old enough and the parents usually move into a smaller house on the land.

bigmat

Torvid wrote:

BigMat wrote:

Greg66 wrote:

Right.

Hands up who owns their own house.

Hands up who has their family (SO/offspring) living with them in that house.

Hands up who calls their house their home (as opposed to a short term prospect on the step ladder to something nicer and more long term).

Hand is up for the first two, don't quite get the third - they aren't mutually exclusive are they?

I think what Greg66 is saying is who can't see themselves moving on from said house ever. I have friends that have been in the same house generations they all end up moving back to bring up kids there.

Very nice, I'm sure, if you can afford it.

Stevo_666

Rick Chasey wrote:

Do you not think it's mental people don't pay CGT on their house?

Never owned one so never paid an enormous amount of attention, but that's crazy. No wonder there was a housing boom.

Not at all.

If people had to pay CGT on the profit from sale of their principal private residence (PPR) it would simply kill the housing market: anyone sitting on a significant gain wouldn't - or more likely couldn't afford to - move house. This would have some fairly serious implications for anyone that had to move say to get a new job, or who had to sell because they had lost their job.

Just to be re-emphasise, the exemption from CGT applies to your PPR, not to another houses that someone owns - so the filthy rich who have the cheek to own more than one property only get exemption on one of them.

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

Do you not think it's mental people don't pay CGT on their house?

Never owned one so never paid an enormous amount of attention, but that's crazy. No wonder there was a housing boom.

Not at all.

If people had to pay CGT on the profit from sale of their principal private residence (PPR) it would simply kill the housing market: anyone sitting on a significant gain wouldn't - or more likely couldn't afford to - move house. This would have some fairly serious implications for anyone that had to move say to get a new job, or who had to sell because they had lost their job.

Just to be re-emphasise, the exemption from CGT applies to your PPR, not to another houses that someone owns - so the filthy rich who have the cheek to own more than one property only get exemption on one of them.

Ah, so CGT would make the market illiquid, rather than stopping it being a tax cheap medium to long term investment?

Having a think, would it though?

Anyone with a significant gain would still see 82% of their gains.

Surely a CGT would just disincentivise people to view property as an investment? Which, right now, post 2008, seems a bloody good idea.

Stevo_666

Rick Chasey wrote:

Ah, so CGT would make the market illiquid, rather than stopping it being a tax cheap medium to long term investment?

That's one pretty major effect, but pretty much all of us need a house to live in - that's why I bought mine. If I sell mine I'll have to buy another to live in so not sure when I'll ever see my ill gotten gains. Like I said, any profit on any property apart from the one you live in gets taxed on sale.

One of the problems of taxing something as essential as a house is that it will encourage people to p1ss money up the wall rather than save it/spend it sensibly. As I see it things like IHT hit people who have tried to save for the future and provide for their kids.

Given pretty much every government (labour included) for donkeys years has never played with the fundamental principle of the PPR tax exemption, doesn't that tell you something ?

Stevo_666

BigMat wrote:

Very nice, I'm sure, if you can afford it.

This kind of sums up the basis for those who are pro-IHT: in a word, jealousy.

W1

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Do you not think it's mental people don't pay CGT on their house?

Never owned one so never paid an enormous amount of attention, but that's crazy. No wonder there was a housing boom.

Not at all.

If people had to pay CGT on the profit from sale of their principal private residence (PPR) it would simply kill the housing market: anyone sitting on a significant gain wouldn't - or more likely couldn't afford to - move house. This would have some fairly serious implications for anyone that had to move say to get a new job, or who had to sell because they had lost their job.

Just to be re-emphasise, the exemption from CGT applies to your PPR, not to another houses that someone owns - so the filthy rich who have the cheek to own more than one property only get exemption on one of them.

Ah, so CGT would make the market illiquid, rather than stopping it being a tax cheap medium to long term investment?

Having a think, would it though?

Anyone with a significant gain would still see 82% of their gains.

Surely a CGT would just disincentivise people to view property as an investment? Which, right now, post 2008, seems a bloody good idea.

Every time you move house you'd be 18% +SDLT behind the market, so you'd need to find that extra before you could move - no-one would ever sell.

rhext

Stevo 666 wrote:

BigMat wrote:

Very nice, I'm sure, if you can afford it.

This kind of sums up the basis for those who are pro-IHT: in a word, jealousy.

Ah, the ad hominem argument. Run out of other ideas then?

rhext

W1 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Do you not think it's mental people don't pay CGT on their house?

Never owned one so never paid an enormous amount of attention, but that's crazy. No wonder there was a housing boom.

Not at all.

If people had to pay CGT on the profit from sale of their principal private residence (PPR) it would simply kill the housing market: anyone sitting on a significant gain wouldn't - or more likely couldn't afford to - move house. This would have some fairly serious implications for anyone that had to move say to get a new job, or who had to sell because they had lost their job.

Just to be re-emphasise, the exemption from CGT applies to your PPR, not to another houses that someone owns - so the filthy rich who have the cheek to own more than one property only get exemption on one of them.

Ah, so CGT would make the market illiquid, rather than stopping it being a tax cheap medium to long term investment?

Having a think, would it though?

Anyone with a significant gain would still see 82% of their gains.

Surely a CGT would just disincentivise people to view property as an investment? Which, right now, post 2008, seems a bloody good idea.

Every time you move house you'd be 18% +SDLT behind the market, so you'd need to find that extra before you could move - no-one would ever sell.

Not correct, you'd only pay CGT on the profit. And everyone else would be paying the same so it would still be a level playing field. It might actually lower the entry barrier for people who don't have houses....can't have that though!