I’ve been reading about the complaints regarding the new mansion tax that the government announced in the budget. Lots of moaning about how these property owners can’t afford it, how it is unfair, how much running a large house costs anyway, and so on. There were claims it would ruin people, claims it will destroy the house’s value, how they do not expect to be able to sell their house, how it will impact their retirement, etc.
Gosh, I’ve not followed this in detail, This must be very punitive tax to create such a backlash. Especially as owning a property worth more than £2m (the bottom threshold for payments) means you are relatively quite affluent. Nope, The tax starts at £2,500 a year and rises in accordance and at the same percentage with the property value. That percentage is 0.125% per annum. Not exactly high. On top of that, people can defer payment until they sell the property.
This is simply rich people moaning about a tiny level of tax. Which confirms that rich people are tighter than anybody else. Even tighter than someone from Yorkshire.
So what is going to happen? people will be selling for a higher price to cover he cost of new tax imposed.
Typical thinking of this brain dead government who are totally incapable of thinking logically
In the SE there are a lot of pensioners stuck in houses that they bought cheap when they were young and which have since appreciated greatly due to the chaos of the housing market in certain areas, where property developers buy a house and then flip it after major luxury renovations. So the pensioners may have done little to their own house, but surrounding affluence is pushing them over the 2m mark.
Yes they can defer but there is a hit against the estate then on top of IHT. I’m not sure how they plan to value for IHT purposes as in do they calc the IHT on the market price and then also knock off any mansion tax arrears so a double whammy.
You can say these are first world problems but you have to consider that these properties will also be very hard to shift now. So some vulnerable equity rich/cash poor people will be trapped in properties that are hard to maintain in their advancing age and impossible to offload. Even if they reduce the price below 2m, the buyer would have to convert to flats to sell on.
That looks like you are making up problems that barely exist just to criticize this tax.
No-one with any sense remains in a property that it is too big, too expensive for them to heat & maintain and unsuited for old age. They should have offloaded the house years ago. Sentiment is clearly an expensive option.
Not all £2m plus houses are sold to developers. Not all £2m properties are sold to be switched into flats. Where there are plenty of £2m+ houses (London) there are lots of people who can afford to privately buy those houses to live in.
The deferment of tax payment would still add up to a small amount. It is a tiny tenth of a percent each year. After 8 years it would reach a whole 1% of the property value. That amount, and more, is negotiated away when agreeing the sale price all the time. It is immaterial.
The significant first world problem is all this unearned wealth that risks not being taxed.
Some of these houses aren’t even that big and it’s not made up. People shouldn’t be forced out of their homes by poor taxation policy. The arrangements should be means tested.
So, someone who may have bought an expensive property recently and forked out 12% stamp duty for the honour of doing so is now expected to fork another fee?
Primary homes should be protected from property taxation, and should be protected for two generations for the family members that you, the investor spend a lifetime saving for. Upon sale after two generations, property taxation should start at zero (no accrued taxes.)
Frankly, I am all for people who try to invest to responsibly take care of themselves and their family members. Good fortune? Good for you.
The presumption is that people who are successful are not otherwise taxed, generous, or hiring out tasks to keep the economy running and care for those who cannot. Your house and the land underneath it is the only asset that matters in the long run, and for most it is the summation of a life of discipline, hard work, money management, and responsibility.
The greasy hands of government and people sitting in comfortably in other countries arbitrarily waving wands and setting lines (Why $2M?) chipping away at a families’ assets is repugnant.
Everyone according to their means…ahem, houses… right Lincolnshire?
Surely that is exactly the point of allowing deferred payment of the tax? If you are unable to pay then you can wait until you’ve sold and then pay. At that point for selling a £2m property the means testing is hardly needed, is it?
There is a massive problem with over-inflated house prices in many parts of the world. The years and years of QE has pumped available cash into the banking systems. This has resulted in very cheap credit. This has allowed individuals and companies to up and up their buying prices. Property is no longer as you describe it (the home for the family), it is an investment by which to gain.
This has benefited a few who were fortunate to get into property in the right place at the right time. Some by chance without planning, some by shrewd investment. Should the gains from such investments not be taxed? It is after all, a route to riches that is only accessible to a few.
This hike in property values also causes many problems. Many ordinary workers (including key workers in health service, care, sanitation, transport) are effectively pushed further out. The one trickle down that does operate is in property. Young people are priced out. Plus renting costs also go up in step with property prices. This lack of affordability becomes a major issue.
Therefore there a good reasons to put downward pressure on property prices and taxation is one such method.
There may be other calls on property proceeds such as care costs with an existing deferred arrangement (a bit like a mortgage), never mind creating a debt for people that are already struggling to maintain a property and may be unable to sell a dilapidated house because of these taxation changes. They will be unable to rent out because of the (now) high cost of renovating and lock in agreements with the new renting act and licence requirements. So people who may be unable to manage their own affairs will be stuck in a trap. A house they no longer want but can’t get rid of.
But where and on what is this tax spent? I, for one, am not quite so convinced that profligate governments are the best nor efficient institutions to use our monies appropriately.
Hold the phone. The original post suggest that people, who owned high-value homes are rich and should be punished with taxes, but now you are saying that there are a lot of people who made good money watching their homes increase in equity thanks to the investor market. Are they the bad rich people too? Are those people to be taxed because of their good decision making and luck in the markets? What are they doing with that equity? is it evil? Are groups like Blackstone that are made up millions of people’s retirement funds evil? Maybe. Maybe not, in fact, probably not.
This is true; many are over-inflated, meaning there is a huge gap between a pre-existing home values compared to the the cost of building. That means the opportunity to get into the home-building business could be better than any time since post WWII. The number of contractor licenses have exploded in my areas with builders chomping at the bit to build affordable housing and make a chunk of money doing it. The key is to this trend moving is to get the blasted government out of the way with saddling fees (more taxes anyone?) and time-eating approval processes to let them get on with - building. I might not be able to make or remotely qualify to flip high-end houses, but I could start a home building firm in less than ten months (if the government will get the heck out of my way).
What’s rich? Be specific.
That is 100% none of your or the government’s business. People stay in their homes for any number of reasons.
Consider that if you want to help people afford homes, drive wages higher through free market capitalism as companies in the construction sector compete for skilled employees created by the massive demand for affordable housing
You can’t tax your way out of the affordability problem, Lincolnshire.
It would be a very brave government that taxed the family home in Australia, it doesn’t even count as an asset for pension or capital gains purposes.
It has to be said that from afar one gets the impression that Britain is in very dire financial straits since leaving the EU with a government desperately trying to increase revenue. That may just be a false impression and they actually have a long term plan to change the economic base of the country (I don’t know)
We too have a home affordability problem and every government effort for first home buyers just forces the price of housing higher.
For all the problems of being upside-down, driving on the wrong side of the road, and putting “ie” on the end of every grown-up word, you all have this one absolutely spot on. 
Predictable. Like U.S. President Ronald Regan once said, the most nine most terrifying phrases in the English language are, “We are here from the government, and we are here to help.”
Indeed Bruce, brexit has cost the uk some £90 billion a year