Using Property Taxes to Encourage Redistribution of Family Homes

Assetbacked

JDD wrote: »

It's got to be a multi-layered solution right?

1. We, and by that I mean the government, must build a certain amount of social housing. Not at the level of the 1950's and 1960's, but enough that it's providing permanent accommodation to families who have been stuck in the hostel/hotel emergency accommodation system for over a year, and perhaps a little more to cover those who are living with relations or friends for more than two years. Unfortunately, this housing can't be built in Louth or Leitrim. It needs to be built close to areas where there is employment, otherwise everyone getting allocated social accommodation is going to be long term unemployed. That's no good for the families or the rural area they've been allocated. Secondly, they have to be built somewhere close to childcare. Most people in social housing can't afford private childcare, and there is not enough publically funded childcare (either places in urban centres, or facilities at all in rural areas) that would allow someone to take up employment, even if they secured something. So until such a point as universal public childcare is available (and this may never happen), families in social housing will have to rely on relatives. So when people say "oh X person turned down a house in Waterford because they wanted to be close to Mammy in Tallaght" it's not just a sense of entitlement - it's an economic necessity, for families anyway.

2. Get rid of the first time buyer grant for new houses. It's just a builder's subsidy. It doesn't reduce the cost of a house for first time buyer, it increases the cost of a house by the amount of a subsidy, and has a knock on effect on the value of second hand houses in the area, thus increasing the price for second time buyers and disincentivising them from selling their first house.

3. More active use of the CPO for vacant land. Yes, it will inhibit the free market for property. Yes, it will disincentivise investors from investing in property. Is that a bad thing? No. When buyers outstrip supplies, then anything that reduces the buyers is a good thing. Investors will choose other things to put their money into. Fine Gael won't do this as they are right wing, and in favour of the free market. The problem is, while the market adjusts (supply comes online) we have a crisis. They're just trying to ride the crisis out without intervening, and to be honest I find that reprehensible.

4. Have a really forensic look at why building costs are so high, without the first reaction being "lower building standards!". Are wages high? Can we get in cheaper labour? Are insurance costs artificially high? Can we find a way to reduce that e.g. through a government insurance scheme (though if we were to do that, you'd want to come down the heavy on any builder that breaches building standards - it should become an individual personal liability, like a doctor or teacher). Anything that reduces building costs *should* decrease the price of property, though again the government would have to make sure, in some way, that these savings are being passed on to the customer.

5. I can't think of anything else. Though I would assume brighter minds than mine have suggested all of the above and other things on this thread. And I would presume all of those options have been discussed within government departments. I just fail to understand why nothing substantial has been done.

I think a more substantial property tax should be introduced which can then fund ensuring a more sustainable market. People who don't pay then adjust their living situation accordingly by selling up. Considering the majority of the wealth in the economy is tied up in property, this is a no brainer.

For Dublin, a more concerted effort to limit commercial space being built in the city until apartment supply picks up.

ELM327

Assetbacked wrote: »

I think a property tax should be introduced to get old people out of their unnecessarily large houses and make way for the next generation. This tax can then fund ensuring a more sustainable market.

There's already a property tax.
Let's not force old people out of a house they have worked for for years/decades. It's not their problem. It's a poor governance problem combined with a social welfare class.

JDD wrote: »

It's got to be a multi-layered solution right?

1. We, and by that I mean the government, must build a certain amount of social housing. Not at the level of the 1950's and 1960's, but enough that it's providing permanent accommodation to families who have been stuck in the hostel/hotel emergency accommodation system for over a year, and perhaps a little more to cover those who are living with relations or friends for more than two years. Unfortunately, this housing can't be built in Louth or Leitrim. It needs to be built close to areas where there is employment, otherwise everyone getting allocated social accommodation is going to be long term unemployed. That's no good for the families or the rural area they've been allocated. Secondly, they have to be built somewhere close to childcare. Most people in social housing can't afford private childcare, and there is not enough publically funded childcare (either places in urban centres, or facilities at all in rural areas) that would allow someone to take up employment, even if they secured something. So until such a point as universal public childcare is available (and this may never happen), families in social housing will have to rely on relatives. So when people say "oh X person turned down a house in Waterford because they wanted to be close to Mammy in Tallaght" it's not just a sense of entitlement - it's an economic necessity, for families anyway.

2. Get rid of the first time buyer grant for new houses. It's just a builder's subsidy. It doesn't reduce the cost of a house for first time buyer, it increases the cost of a house by the amount of a subsidy, and has a knock on effect on the value of second hand houses in the area, thus increasing the price for second time buyers and disincentivising them from selling their first house.

3. More active use of the CPO for vacant land. Yes, it will inhibit the free market for property. Yes, it will disincentivise investors from investing in property. Is that a bad thing? No. When buyers outstrip supplies, then anything that reduces the buyers is a good thing. Investors will choose other things to put their money into. Fine Gael won't do this as they are right wing, and in favour of the free market. The problem is, while the market adjusts (supply comes online) we have a crisis. They're just trying to ride the crisis out without intervening, and to be honest I find that reprehensible.

4. Have a really forensic look at why building costs are so high, without the first reaction being "lower building standards!". Are wages high? Can we get in cheaper labour? Are insurance costs artificially high? Can we find a way to reduce that e.g. through a government insurance scheme (though if we were to do that, you'd want to come down the heavy on any builder that breaches building standards - it should become an individual personal liability, like a doctor or teacher). Anything that reduces building costs *should* decrease the price of property, though again the government would have to make sure, in some way, that these savings are being passed on to the customer.

5. I can't think of anything else. Though I would assume brighter minds than mine have suggested all of the above and other things on this thread. And I would presume all of those options have been discussed within government departments. I just fail to understand why nothing substantial has been done.

Social Welfare housing needs to be provided where it is cheapest to the state. If you want a better/bigger house or a better location then obtain gainful employment and, you know, pay for it!

Assetbacked

ELM327 wrote: »

There's already a property tax.
Let's not force old people out of a house they have worked for for years/decades. It's not their problem. It's a poor governance problem combined with a social welfare class.

https://www.irishtimes.com/business/financial-services/we-are-wealthier-than-during-the-boom-says-central-bank-1.3691310

Household net worth is now higher than it was in the boom (mainly due to property price increases) meaning that the status quo remains and wealth is continually being tied up in property - considering we live in a progressive tax system, this should be taxed. If people can't pay then sell and adjust their living accordingly.

ELM327

Assetbacked wrote: »

https://www.irishtimes.com/business/financial-services/we-are-wealthier-than-during-the-boom-says-central-bank-1.3691310

Household net worth is now higher than it was in the boom (mainly due to property price increases) meaning that the status quo remains and wealth is continually being tied up in property - considering we live in a progressive tax system, this should be taxed. If people can't pay then sell and adjust their living accordingly.

This is more an issue for Politics than Accommodation.


However the wealth used to purchase property has already been taxed a number of times:
Income tax
Property tax
vat
stamp duty


How many more taxes? It is not fair or just to force an elderly person out of their family home. That's rubbish and should not be supported and is certainly not "progressive"

RayCun

ELM327 wrote: »

It is not fair or just to force an elderly person out of their family home. That's rubbish and should not be supported and is certainly not "progressive"

Nobody is forcing an elderly person out of their home.
If you are 70 years old, on a fixed income but own your home, you can get equity release to pay property tax.

And it absolutely is progressive to have a tax on wealth.

ELM327

So... you want someone to take out a second mortgage on their pension (defer payments until after death) so that the state can fund free houses for people that don't work? Nonsense. Are you Richard Boyd barret?

Kintarō Hattori

RayCun wrote: »

Nobody is forcing an elderly person out of their home.
If you are 70 years old, on a fixed income but own your home, you can get equity release to pay property tax.

And it absolutely is progressive to have a tax on wealth.

Owning a home that you've worked all your life to own shouldn't be classed as wealth. We all require a roof over our heads. Sure if you own more than one property then you might be considered wealthy by some definition but simply having worked hard to own a family home, doesn't mean you should be taxed out of it. It's absolutely wrong.

RayCun

ELM327 wrote: »

So... you want someone to take out a second mortgage on their pension (defer payments until after death) so that the state can fund free houses for people that don't work?

No, I want people to pay wealth taxes so the state can afford better public transport and schools and hospitals :rolleyes:

RayCun

Kintarō Hattori wrote: »

Owning a home that you've worked all your life to own shouldn't be classed as wealth.

Owning stocks and shares that you've worked all your life to own shouldn't be classed as wealth?

Owning a small business that you've worked all your life to own shouldn't be classed as wealth?

Owning an expensive car that you've worked all your life to own shouldn't be classed as wealth?

A house is an asset, of course it's wealth.

beauf

RayCun wrote: »

No, I want people to pay wealth taxes so the state can afford better public transport and schools and hospitals :rolleyes:

So what will happen is people will spend it all while they can, as then the'll only be paying tax on it a couple of times instead of 4 or 5 times. Then when they need hospitals and nursing homes, they'll be on the same level as everyone else.

RayCun

beauf wrote: »

So what will happen is people will spend it all while they can, as then the'll only be paying tax on it a couple of times instead of 4 or 5 times. Then when they need hospitals and nursing homes, they'll be on the same level as everyone else.

yeah, that's what will happen. The same way the introduction of income tax made people give up working.

seamus

Kintarō Hattori wrote: »

Owning a home that you've worked all your life to own shouldn't be classed as wealth. We all require a roof over our heads. Sure if you own more than one property then you might be considered wealthy by some definition but simply having worked hard to own a family home, doesn't mean you should be taxed out of it. It's absolutely wrong.

Nobody's talking about "taxing them out", but recognising that wealth hoarding in any form denies funding for public services and disadvantages those who are coming behind you.

Thus the aim of any state should be to balance the right an individual to accumulate wealth against the needs of wider society.

Emotive language like "worked hard all their life for the family home" conjures up images of a little old lady in a modest rural cottage. Rather than the reality of two able-bodied and well-pensioned people rattling around a five bed house in Harold's Cross.

Nobody's seeking to strip old people of everything they've worked for and force them to die alone in a one-bed flat. There does however, need to be a top-down redistribution of wealth in order to ensure that everyone is given a fair chance to "work all their life to own their own home".

If they can afford to pay a reasonable tax on their large property, then more power to them. If they can't, then they should sell up and buy something more in line with their means.

Cyrus

seamus wrote: »

Emotive language like "worked hard all their life for the family home" conjures up images of a little old lady in a modest rural cottage. Rather than the reality of two able-bodied and well-pensioned people rattling around a five bed house in Harold's Cross.

conjurs up images of people who have paid tax all their life and already made their contribution to society and probably funded most of their own pension.

beauf

RayCun wrote: »

yeah, that's what will happen. The same way the introduction of income tax made people give up working.

It more like increasing income tax usually increases the black/shadow economy.

There was also this...

https://www.irishexaminer.com/breakingnews/views/ourview/fair-deal-scheme-abused-change-rules-to-end-bed-blocks-886426.html

RayCun

Cyrus wrote: »

conjurs up images of people who have paid tax all their life and already made their contribution to society and probably funded most of their own pension.

So take people in this situation.

They've invested in a pension, paid their mortgage, and have a decent income, but not enough to pay an increased property tax.

It's probably better for society if they sell the house that is now too big for them and move somewhere smaller, but they don't want to do that, and they don't have to.

They can do the reverse mortgage/equity release thing, and stay in their house as long as they like.

They don't lose out at all.

Who loses out? Who complains? The kids who wanted to inherit. Inherit a house that they didn't pay for. Get something that they didn't work hard for all their lives.

This isn't about protecting hard-working old people. It's about people who want something for nothing, and don't want to lose any of it to tax.

beauf

seamus wrote: »

Nobody's talking about "taxing them out", but recognising that wealth hoarding in any form denies funding for public services and disadvantages those who are coming behind you..

..If they can afford to pay a reasonable tax on their large property, then more power to them. If they can't, then they should sell up and buy something more in line with their means.

Forcing people out like that would probably make it too expensive for those who want to force other people out.

beauf

RayCun wrote: »

...
It's probably better for society if they sell the house that is now too big for them and move somewhere smaller, but they don't want to do that, and they don't have to.

They can do the reverse mortgage/equity release thing, and stay in their house as long as they like.

They don't lose out at all. ...

The cost to change is massive. Even if there were more suitable places to
downsize too, which there isn't.

They just spend a ton of money to end up exactly where they started. Cheaper to pay the tax and stay in a location they are familiar with know their neighbours etc.

Graham

Mod Note

Thread Split.
Interesting conversation but probably better suited to its own thread.

Moonjet

It would be political suicide for any party that tried to introduce such a policy, given 70% of the population own their properties (mortgaged or not), however logical it may be to resolve the housing crisis.

RayCun

Moonjet wrote: »

It would be political suicide for any party that tried to introduce such a policy, given 70% of the population own their properties (mortgaged or not), however logical it may be to resolve the housing crisis.

We already have property tax

Cyrus

RayCun wrote: »

So take people in this situation.

They've invested in a pension, paid their mortgage, and have a decent income, but not enough to pay an increased property tax.

It's probably better for society if they sell the house that is now too big for them and move somewhere smaller, but they don't want to do that, and they don't have to.

They can do the reverse mortgage/equity release thing, and stay in their house as long as they like.

They don't lose out at all.

Who loses out? Who complains? The kids who wanted to inherit. Inherit a house that they didn't pay for. Get something that they didn't work hard for all their lives.

This isn't about protecting hard-working old people. It's about people who want something for nothing, and don't want to lose any of it to tax.

why wouldn't they lose out to tax, there are thresholds for CAT you know?

Moonjet

RayCun wrote: »

We already have property tax

Read the OP:


"I think a more substantial property tax should be introduced which can then fund ensuring a more sustainable market."

RayCun

Moonjet wrote: »

Read the OP:


"I think a more substantial property tax should be introduced which can then fund ensuring a more sustainable market."

Yes, but since we already have a property tax, there is no need to introduce such a policy. Increasing the rate of an existing tax is a lot easier, especially if it can be 'ringfenced' for sunshine and rainbows.

beauf

From what I'm reading, new builds are mainly family homes. Many not in the range of the first time buyer. Because they have the better profit margin.

The shortage seems be in social housing, affordable housing, and FTB, and rentals. Which seems an entirely different type of property than a "a five bed house in Harold's Cross".

So this focus on old people and inheritance, has almost no impact on the shortages.

Spanish Eyes

The day that those in receipt of social housing, or HAP, or RAS, etc., or privately renting have to pay something towards the upkeep of facilities (apart from bin charges obv!), is the day I will say OK no problem.

Most other jurisdictions have a charge on property whether renting or owned. That is to fund lighting, rubbish collection (I know), road maintenance, street cleaning and so on. Everyone benefits, but only owners pay here for some reason.

I await the response.

LirW

And where exactly should elderly downsize to? Of course it's a bug bear of many that elderly sit in houses way too big but the truth is that there's little out there that people can downsize to. If they live in an urban area, they're not particularly sprinkled with nicely sized two-bedroom homes and if they compete for smaller 3-bed homes, people will be up in Arms that the boomers will buy "their houses".
Also moving them far out isn't an option either because elderly do need somewhat of a support network, especially when age progresses and they might need help/medical treatments.
There are plenty of elderly that want to downsize but they can't unless they really move further afield, because there's simply nothing around.

It really doesn't change anything about the problem that affordable supply is scarce.

Spanish Eyes

There are two other issues that spring to mind re the availability of certain housing.

1. If someone dies, it takes months if not up to a year to obtain Probate. House sitting there empty until it can either be sold or transferred.

2. Fair Deal Scheme. If family let out the family home of the person in receipt of FD, taxes have to be paid, and the FD is reduced. Meaning a lot of decent properties are lying idle.

Both above have a big impact on availability of property.

RayCun

RayCun wrote: »

Who loses out? Who complains? The kids who wanted to inherit. Inherit a house that they didn't pay for. Get something that they didn't work hard for all their lives.

This isn't about protecting hard-working old people. It's about people who want something for nothing, and don't want to lose any of it to tax.

Define irony: Labeling the families of hard working taxpayers as "people who want something for nothing" so that you can provide housing for people who don't work for a living.

I'm telling you, Boards is like cloud cuckoo land sometimes. I'm never sure if people are ripping the pi$$ half the time.

Are you seriously advocating that old folks who've worked since they were 16, paid income tax their whole lives, paid VAT, stamp duty, 14% interest rate mortgages, property tax in recent years and whose kids will pay CGT on their house when they pass on should be taxed more.......because the government has failed in their duties over the past number of years to provide adequate housing?

Three words for you: F*** that S***

The housing crisis could be fixed in 6-12 months, if any politician had the stones to do it.

1. Incentivise building with tax breaks
2. Enforce the social & affordable housing planning conditions that have been around 20 years but which builder's have been allowed to buy their way out of
3. Locate all social housing outside the M50

brightspark

seamus wrote: »

Emotive language like "worked hard all their life for the family home" conjures up images of a little old lady in a modest rural cottage. Rather than the reality of two able-bodied and well-pensioned people rattling around a five bed house in Harold's Cross.

A "five bed house in Harold's Cross" should never become "Social Housing".

If anyone wants a large property in Dublin then they should "work hard" and pay for it.

RayCun

Deleted User wrote: »

Define irony: Labeling the families of hard working taxpayers as "people who want something for nothing" so that you can provide housing for people who don't work for a living.

1. "the families of hard working taxpayers"
not the hard-working taxpayers themselves, but the people who want to benefit from what someone else worked for. You know, scroungers :rolleyes:

2. Tax is tax, it all goes into the same pot. If you don't like the idea of this tax going on housing, feel free to imagine it going on education instead, or whatever things it is you are glad money is spent on.

beauf

Spanish Eyes wrote: »

...
2. Fair Deal Scheme. If family let out the family home of the person in receipt of FD, taxes have to be paid, and the FD is reduced. Meaning a lot of decent properties are lying idle....

80% of their income goes into the Fairdeal anyway. So its would be entirely pointless.

If any issues come up, the person in the nursing home isn't going to be able to deal with them.