Household Charge Mega-Thread [Part 2] *Poll Reset*

tayto lover

lugha wrote: »

Perhaps some of the confusion about “assets” arises because you are focusing on the everyday understanding of what the word means?

For example an athlete’s speed or strength would be deemed as asset to them but their poor eyesight or beer belly would not. In such usages, the asset is necessarily beneficial.

Asset on the context of property however simply means you posses the property. And if your name is on the deeds then you do own it and you do have an asset. You may be far better off financially if you did not , but you do, and it is an asset.

What has this got to do with property tax anyway?

It has everything to do with it.
If you have a mortgage on a home that costs 400k in 2005 and with negative equity is now only worth 130k and you have a fixed rate over 30 years then you are on a big loser. The Liquidity value is poor.

Asset
In accounting, anything of value that a person or firm buys. Assets can be physical, such as real estate or stocks, a claim on debts, such as accounts receivable or liens, or a right, such as a patent. Of crucial importance to assets is their relative liquidity, or the ease with which they can be converted to cash.

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tayto lover wrote: »

It has everything to do with it.

No, it doesn't. The cost to your local council of providing services on a per household basis does not depend on the value of the individual houses.

lugha

Ghandee wrote: »

Maybe what they bring in doesn't cover the wages which can't be touched

Or as some of us might like to put it, the operation is loss making, as I suggested! What was your point again?

darkhorse wrote: »

I don't believe anybody is confused about the meaning of the word asset. It is something that makes you money.

Well I dispute this definition but in any case, many, but not all, owner-occupied residential properties DO make money by virtue of the owner not having to pay rent. Indeed, on average I would say they do.

Some dispute this on two grounds;

1. Some fail to see that such an arrangement is of material benefit to the owner as they do not explicitly pay rent (including one poster who bizarrely did understood that we all pay for water, even if that payment too is not explicit!)

And 2. the rent saved is not enough to pay the mortgage! (It may not, but by what rational would you argue that it should?)

darkhorse wrote: »

I have never regarded my house as an asset, no matter what explanation an economist may give. My reasoning for this is that from day one, whether you buy or build, you are spending money on maintenance. A TRUE asset is one that makes you money with NO outlay of expenses or fees.

Any of us are of course entitled to define asset, or any word, any way we like. I could define it as a female arse if I thought this useful! I would suggest that your definition requiring that an asset must be profit making is at odds with how as asset is general understood. I would go with the definition given by tayto lover below.

tayto lover wrote: »

Asset
In accounting, anything of value that a person or firm buys. Assets can be physical, such as real estate or stocks, a claim on debts, such as accounts receivable or liens, or a right, such as a patent.

i.e. anything of value. And a residential properties most definitely has a value. There may be associated liabilities but they do have a value. If either of you dispute this, can you sign your houses, that have no value, over to me?

Geuze

darkhorse wrote: »

Hi,
I don't believe anybody is confused about the meaning of the word asset. It is something that makes you money. I have never regarded my house as an asset, no matter what explanation an economist may give. My reasoning for this is that from day one, whether you buy or build, you are spending money on maintenance. A TRUE asset is one that makes you money with NO outlay of expenses or fees. Now, if this was my belief before the recession, well, it just stands to reason that because I am in so much negative equity, you know the rest.

On your question, what has this got to do with the property tax, well, there is a lot of posts since we started this, but as far as I can remember one of the people in favour of this tax on our homes actually brought it up in the context of a person being asset rich if they one their own home, therefore should pay a tax on it.

Lots of assets earn no return.

Money in cash form or in a current a/c is an asset in that you own it, but you earn no interest or return.

Land. If you work the land you earn a return, but is that a return to your labour, or a return from the land?

Art. A Picasso painting is an asset, but pays no interest.

Geuze

You can spend money on consumer goods and services or use savings to buy assets.

There is nothing else you can do with your income - spend it or save it.

So when you buy a house you are buying an asset. An asset is simply a durable item that you own.

You may finance part of the purchase with a mortgage, but that is a secondary issue

(It's debateable whether cars are assets - they are counted as consumer goods.)

Of course, most people don't consider their house as an asset like shares / bonds / cash / commercial property. They consider it as a home. Fair enough. But it's still an asset.

Real assets, i.e. land and property, require maintenance. If not, they will tend to lose value.

Geuze

The return from buying a house is an imputed, or notional rental income.

This was added to cash income and taxed in Ireland until 1969.

Some say it should be taxed now, as a form of property tax.

Here's an old JSTOR paper on imputed rental income:

http://www.jstor.org/discover/10.2307/2325629?uid=7314344&uid=3738232&uid=2129&uid=2&uid=70&uid=3&uid=67&uid=7314288&uid=62&sid=21101147960281

lugha

Geuze wrote: »

The return from buying a house is an imputed, or notional rental income.

This was added to cash income and taxed in Ireland until 1969.

Some say it should be taxed now, as a form of property tax.

But surely this is not politically viable to present it in these terms, whatever the merits of the idea? Many will be apoplectic at the notion of paying tax on their notional rental income, not least because they fail to see it as an income!

Would it not amount to the same thing to say: a progressive property tax will be levied; the amount you must pay depends on the value of your property; and this value in turn will be ascertained by determining what rental income your property is capable of generating?

To my mind it amounts to the same thing (perhaps with a few tweaks for exceptions / exemptions) but would have the illusion of being a lot more palatable?

darkhorse

lugha wrote: »

. There may be associated liabilities but they do have a value. If either of you dispute this, can you sign your houses, that have no value, over to me?

I'd still have go and find somewhere for my family to live, but then again if I go by your logic, I should be able to afford a nice little place on the minus income that I would have after you paid me > 100 grand less than what my home is worth because of negative equity.

Hijpo

have taxes been reduced/abolished in the last few years or has government spending been increased?

Geuze

lugha wrote: »

Would it not amount to the same thing to say: a progressive property tax will be levied; the amount you must pay depends on the value of your property; and this value in turn will be ascertained by determining what rental income your property is capable of generating?

To my mind it amounts to the same thing (perhaps with a few tweaks for exceptions / exemptions) but would have the illusion of being a lot more palatable?

I agree.

Geuze

Hijpo wrote: »

have taxes been reduced/abolished in the last few years or has government spending been increased?

Tax revenues fell a lot initially, due to the crash/crisis/recession.

Govt exp eventually stopped rising.

bgrizzley

your notional rental income, lugha, is the same as my notional income from the oil well in my garden. Wishful thinking.
You may as well argue that they should tax young adults for living at home cause it saves them too much money in rent. Or go the whole hog and tax the homeless, they save a fortune on rent especially if their cardboard box is in a nice area.

bgrizzley

darkhorse wrote: »

I'd still have go and find somewhere for my family to live, but then again if I go by your logic, I should be able to afford a nice little place on the minus income that I would have after you paid me > 100 grand less than what my home is worth because of negative equity.

And you'd still have to pay this "wealth" tax cause landlords are allowed pass it straight on to you. Their bricks and mortar are different to ours.

Hijpo

Geuze wrote: »

Govt exp eventually stopped rising.

Well thats not true, theres enough money there to give there advisors 3k

darkhorse

Geuze wrote: »

Of course, most people don't consider their house as an asset like shares / bonds / cash / commercial property. They consider it as a home. Fair enough. But it's still an asset.
.

To me it's not, but I suppose it depends on which way you look at it.

Is Your House an Asset? Let Robert Kiyosaki explain to you - YouTube

► 2:07► 2:07

www.youtube.com/watch?v=P1KO_Sjsq2U8 Aug 2008 - 2 min - Uploaded by PropertyAgentKevin
Most of the people think their house is an asset. Is it true? Let Robert Kiyosaki explain what are the true ...

Ghandee

Lability it is then. ^:D

dvpower

Geuze wrote: »

Govt exp eventually stopped rising.

Hijpo wrote: »

Well thats not true, theres enough money there to give there advisors 3k

Maybe use actual figures.

http://www.cso.ie/indicators/default.aspx?id=6

dvpower

Ghandee wrote: »

Lability it is then. ^:D

I suppose if some guy on YouTube says so...

edit: The same guy thinks that investing isn't risky.
http://www.youtube.com/watch?v=viu2rRS8dyg

lugha

bgrizzley wrote: »

your notional rental income, lugha, is the same as my notional income from the oil well in my garden. Wishful thinking.

I suspect you are confusing the ideas of notional v actual income with real v imaginary income. The former pair constitute real income as you can assign a euro amount measuring the extent by which you would be better off by being a beneficiary of one or the other. Income from your oil well is alas, like the well, imaginary.

If you doubt this, perhaps you would be good enough to make your house available to me? (And why wouldn’t you? If you don’t benefit by it, you lose nothing by giving it to me :P). I am sure I could find a way to earn a few quid from it! Were you to be kind enough to extend your offer to allow me exploit your oil well, I would graciously decline as I see no way of generating an income from an imaginary asset!

bgrizzley wrote: »

You may as well argue that they should tax young adults for living at home cause it saves them too much money in rent.

The owners of the home (parents?) would be liable for whatever property tax is ultimately introduced. Once it is paid, it would not concern me whether they pass the cost on to their offspring or not.

bgrizzley wrote: »

Or go the whole hog and tax the homeless, they save a fortune on rent especially if their cardboard box is in a nice area.

The rational for taxing notional income acquired by those living in their own homes is that the are the beneficiaries of something that would cost say €1,000 per month, if they did not actually own their home. I would estimate the corresponding monthly cost for having a cardboard box to be €0 so, no joy for us tax lovers there alas.

Now squatters on the other hand …..

darkhorse

Geuze wrote: »

Lots of assets earn no return.

Money in cash form or in a current a/c is an asset in that you own it, but you earn no interest or return.

Art. A Picasso painting is an asset, but pays no interest.

I would have to agree with you there, a Picasso is an asset, but unless you are a person of means, you would not have a Picasso. On the other hand, you could be good at the oul drawing. Also, you could'nt live in a Picasso. Plus, you would have to be a complete idiot to take out a mortgage on a Picasso.

By the way, I earned interest on my current a/c, up until sep 2011.

dxhound2005

darkhorse wrote: »

To me it's not, but I suppose it depends on which way you look at it.

Is Your House an Asset? Let Robert Kiyosaki explain to you - YouTube

► 2:07► 2:07

www.youtube.com/watch?v=P1KO_Sjsq2U8 Aug 2008 - 2 min - Uploaded by PropertyAgentKevin
Most of the people think their house is an asset. Is it true? Let Robert Kiyosaki explain what are the true ...

Dodgy guy and looks dodgy. Maybe you have something from Seanie Fitzpatrick telling us how banking works.

http://www.dailyfinance.com/2010/02/25/robert-kiyosaki-taken-down-by-cbc/

darkhorse

Geuze wrote: »

The return from buying a house is an imputed, or notional rental income.

I already told another poster on this thread earlier that my bank would take a notional lodgement.

darkhorse

dvpower wrote: »

Maybe use actual figures.

http://www.cso.ie/indicators/default.aspx?id=6

www.cso.ie
You +1'd this publicly. Undo
Government body responsible for compiling Irish official statistics. Provides data and information on methodology.

That takes care of that one so.

darkhorse

dvpower wrote: »

I suppose if some guy on YouTube says so...

Yeah, some rich guy on utube.:)]

darkhorse

Guy's,
I have to go away for a couple of hours. Later

dvpower

darkhorse wrote: »

www.cso.ie
You +1'd this publicly. Undo
Government body responsible for compiling Irish official statistics. Provides data and information on methodology.

That takes care of that one so.

Where else would you go for figures on government spending, if you don't accept the figures coming out of the CSO?

This thread is getting more and more ridiculous.

Hijpo

dvpower wrote: »

Maybe use actual figures.

http://www.cso.ie/indicators/default.aspx?id=6

Ok heres some actual figures for you

http://itsapoliticalworld.wordpress.com/2011/12/06/irish-government-special-advisers-the-list/


I have no apples in this hand, how many apples can i put in the other hand??? deficit in one hand still increasing expenditure to the other.

So not only do we pay huge salaries and pensions to the people who are supposed to know how to run the country, but were also bumping up the wages of the people who tell them how to run the country. Why not ditch the government all together and give the jobs to the advisors, there doing the work as it is.

tayto lover

So a house that is costing money to run is NOT an asset --- I knew that.

Ghandee

dvpower wrote: »

I suppose if some guy on YouTube says so...

edit: The same guy thinks that investing isn't risky.
http://www.youtube.com/watch?v=viu2rRS8dyg

Its how he explains it dv.
Does it not make sense to you?
Something you can derive an actual income from (generates cash flow) its an asset.
Something that costs you money on maintenance (putting aside mortgage repayments on negative equity) is a liability.

I.found him quite easy to understand.

dvpower

Hijpo wrote: »

Ok heres some actual figures for you

http://itsapoliticalworld.wordpress.com/2011/12/06/irish-government-special-advisers-the-list/

The CSO figures are actual figures - definitive ones at that.