Using Property Taxes to Encourage Redistribution of Family Homes

beauf

Spanish Eyes wrote: »

Ah yes, I know what you mean, have personal experience.

But my point was, that if the value of a family home of a FD recipient (which is exempt from the calculation for FD BTW) was rented out, the rental income requires a tax return, and the income is calculated for FD too. Just saying!

Its barely worth the hassle even if you have no major costs.

beauf

Assetbacked wrote: »

... It is entirely fair and to not do it results in an extremely unfair system. We have returned to a situation which previously existed with landowners being the wealthy in society and now need to restore the balance....

People with lots of income tend to have property.
People with property may not have a lot of income.
People with not a lot income tend not to acquire property.

Which came first the income or the property.

("A landowner is a person who owns land, especially a large amount of land")
So if someone is prudent and buys their own own home, no matter how modest. You want to equate that with Landowner's of Penal times. Nice embellishment.

brightspark

Assetbacked wrote: »

They have benefited from the astronomical increase in the value of their property without really doing anything to achieve it. Where they would have purchased the house for a relatively modest sum, they could sell it for an incredible profit.

I bought my house in the early stages of the last "boom", friends have since told me they thought I had paid too much and would be reduced to eating beans. It was very tight for the early years.
At the peak of the boom the estate agent who sold me the house was saying how much it had probably increased in value!!! BUT that means nothing, if I was to sell it, another house would cost me a similar amount so the increase in value is meaningless.

Assetbacked wrote: »

The reality is that our tax system works to ensure that those you are richer pay more. The wealth is getting tied up in property so should be re-integrated back into the economy.

A private residence isn't "wealth", an argument could be made against landlords, but HAP etc., is what is making them wealthy, remove that (or at least substantially reduce the cap) and force the social housing into cheaper areas. That will allow rent prices to fall.

Assetbacked wrote: »

An alternatively "emotive" image is to describe the working couple paying 2000 for a two bed property as an average rental cost with a young child for which they have to pay healthcare, being one pay cheque from rental arrears while an old person sits in their empty 4 bed house.

As many found out if you buy your own house you might only be one pay cheque from defaulting on your mortgage.

A working couple with "a young child" only need a two bedroom home.

We (my parents,my two sisters and my grandmother) lived in a two bedroom house while they saved to buy a house (three bedroom) and then worked hard to pay for it.

Assetbacked wrote: »

One disgruntled pensioner versus a young family of three still contributing to the economy and requiring a bit more security than the old person in a house they don't need.

Perhaps a scheme to allow pensioner to be exempt from stamp duty and other fees involved in moving home could provide an incentive to some?

Assetbacked

beauf wrote: »

People with lots of income tend to have property.
People with property may not have a lot of income.
People with not a lot income tend not to acquire property.

Which came first the income or the property.

("A landowner is a person who owns land, especially a large amount of land")
So if someone is prudent and buys their own own home, no matter how modest. You want to equate that with Landowner's of Penal times. Nice embellishment.

No, I'm talking about the staggering inequality of wealth in Irish society, predominantly down to the money being pushed up the pyramid from renting workers into the pockets of landowners. Do you think it would be fair for those who live mortgage free to only be entitled to sell their property for the price they paid for it? So if a house was bought for 20k in the 80s and was now worth 200k they should only benefit from the 20k plus the normal inflation rate (rather than the property increase rate)?

Ronaldinho

Assetbacked wrote: »

They have benefited from the astronomical increase in the value of their property without really doing anything to achieve it. Where they would have purchased the house for a relatively modest sum, they could sell it for an incredible profit.

Sure - and then where would they live?

You're massively over complicating things - we just need to build more houses and apartments.

Assetbacked

brightspark wrote: »

I bought my house in the early stages of the last "boom", friends have since told me they thought I had paid too much and would be reduced to eating beans. It was very tight for the early years.
At the peak of the boom the estate agent who sold me the house was saying how much it had probably increased in value!!! BUT that means nothing, if I was to sell it, another house would cost me a similar amount so the increase in value is meaningless.

brightspark wrote: »

A private residence isn't "wealth", an argument could be made against landlords, but HAP etc., is what is making them wealthy, remove that (or at least substantially reduce the cap) and force the social housing into cheaper areas. That will allow rent prices to fall.

A private residence is wealth though - it's an asset, it has value and can be sold. I completely agree with forcing social housing into cheaper areas and that there should be more flexibility imposed on the recipients (i.e. in terms of choice and downgrading when the family is moved out) but at the same time appreciating that it would not make sense to put it in areas with not a lot of jobs.

brightspark wrote: »

Perhaps a scheme to allow pensioner to be exempt from stamp duty and other fees involved in moving home could provide an incentive to some?

The issue with that is that it won't decrease property prices by the 50%+ average that they really should decrease by in order to approach something somewhat sustainable. We should not be in a situation where the average house price is so much higher than the average salary.

brightspark

Assetbacked wrote: »

They have benefited from the astronomical increase in the value of their property without really doing anything to achieve it. Where they would have purchased the house for a relatively modest sum, they could sell it for an incredible profit.

And where would they live? The "incredible profit" would be required to pay for another property

Assetbacked wrote: »

On inheritance tax - the child beneficiary threshold is incredible. 320k tax free. A person on the average salary would work for 8 years on their 40k per year salary tax free for a similar benefit. This is not fair.

You are forgetting that in the case of most individual property owners that tax was paid already on the income used to purchase the property (I remember paying tax at 60% +PRSI on my overtime income)
.
The only tax relief I had when paying my mortgage was on the interest, not the principle. VAT is paid on all materials and labour when building a house and stamp duty is also paid.


You are also basically saying that it's not fair that those whose parents didn't work hard and save their money etc. don't get anything while those whose parents did work hard get an inheritance.
If your parents didn't work hard, blame them not the ones who worked!

Spanish Eyes

I think the bottom line is that those who have limited resources will be catered for, and rightly so IMO.

However, those who have worked hard and built up a bit of capital will be charged a whack, on assets, plus a % of income which may be a pension they have paid for with their own resources.

Never mind, as long as those who need it are cared for that is good.

However, those who never claimed a penny from the State get very little back in old age under FD either.

beauf

Assetbacked wrote: »

No, I'm talking about the staggering inequality of wealth in Irish society, predominantly down to the money being pushed up the pyramid from renting workers into the pockets of landowners. Do you think it would be fair for those who live mortgage free to only be entitled to sell their property for the price they paid for it? So if a house was bought for 20k in the 80s and was now worth 200k they should only benefit from the 20k plus the normal inflation rate (rather than the property increase rate)?

The rent is mainly paying tax. So you should think of it as paying for services via tax that you are happy paying for.

If being a landlord was path to vast wealth and more property why do the vast majority own only one rental property.

As for limiting the return on investing in property. Some countries do this. But it must have impact on encouraging people to build property. Good luck selling that idea in the middle of a shortage.

Assetbacked

brightspark wrote: »

And where would they live? The "incredible profit" would be required to pay for another property



You are forgetting that in the case of most individual property owners that tax was paid already on the income used to purchase the property (I remember paying tax at 60% +PRSI on my overtime income)
.
The only tax relief I had when paying my mortgage was on the interest, not the principle. VAT is paid on all materials and labour when building a house and stamp duty is also paid.


You are also basically saying that it's not fair that those whose parents didn't work hard and save their money etc. don't get anything while those whose parents did work hard get an inheritance.
If your parents didn't work hard, blame them not the ones who worked!

Inheritance is a separate issue but all you can say is the parents worked hard. They are dead in an inheritance situation so what is the justification to allow the dead person's assets flow down to someone who happens to be their child in a manner which essentially provides that person with something for nothing?

On the tax point - if the market was flooded as it should be with houses and values plummeted, would you have an objection to this? If, without trying to take money from house owners now, we ended up creating a market where average house prices dropped at least 50%, would that be a problem? It would be my ideal solution so a property tax increase would not be required. However, I feel that the creation of conditions for house prices to drop to sustainable levels (at least 50% of current average in Dublin), would still be met with strong opposition.

Assetbacked

Ronaldinho wrote: »

Sure - and then where would they live?

You're massively over complicating things - we just need to build more houses and apartments.

This can't happen when you have so much NIMBYism. St Anne's Park and St Paul's in Raheny as two large developments recently being rejected by NIMBYs which have the supposed left wing councillors even objecting! You then have Pat Kenny, in his ivory tower, objecting to an apartment looking at his bathroom window in a relatively small block of housing, Leo Varadker objecting to a housing development in his constituency. This all forms part of a large cohort who just do not appreciate the significance of the crisis we are in and won't allow the houses to be built. As a result, the matter has to be "complicated" as you put it and other measures are needed such as a larger property tax to get more houses on the market.

garhjw

Assetbacked wrote: »

This can't happen when you have so much NIMBYism. St Anne's Park and St Paul's in Raheny as two large developments recently being rejected by NIMBYs which have the supposed left wing councillors even objecting! You then have Pat Kenny, in his ivory tower, objecting to an apartment looking at his bathroom window in a relatively small block of housing, Leo Varadker objecting to a housing development in his constituency. This all forms part of a large cohort who just do not appreciate the significance of the crisis we are in and won't allow the houses to be built. As a result, the matter has to be "complicated" as you put it and other measures are needed such as a larger property tax to get more houses on the market.

Some people work a lot harder than others and are therefore paid more money which means they can afford bigger or nicer houses. These people will have contributed more tax as they earn more and you now want to penalise them further for success. Nonsensical

Supply of house and apartments needs to be increased, we dont left wing bolloxology.

GGTrek

the OP and a few comrade followers are just showing their true socialist creed: the state should just take wealth away from private citizens!

I shall just quote Churchill on what I think about their ideology and still very valid today:
https://winstonchurchill.hillsdale.edu/socialism-is-the-philosophy-of-failure-winston-churchill/

“Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy.” —Perth, Scotland, 28 May 1948, in Churchill, Europe Unite: Speeches 1947 & 1948

“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.” —House of Commons, 22 October 1945.

I believe there are a lot of socialists college students now posting on the property section of boards. There are also very few old known comrades.

This “wealth inequality” nonsense is getting boring to read about. It’s nothing but begrudging those who do well and trying to steal their money which should be theirs and their families and giving it to strangers who weren’t as successful. Tough luck is all I can say. The government should have no hand whatsoever in interfering in a family accumulating money.

Property taxes should be abolished never mind this rubbish of punishing home owners to fund layabouts, particularly older home owners. CAT is also an abomination and should be totally scrapped (well for transfers within the family anyway) as it has been in many countries. Parents should be able to gift anything they want completely tax free to their children. At least the taxfree threasholds are being increased every year and this will continue along with the fact a person who actually does some tax planning can not only minimize the CAT they pay but also avoid the fair deal getting its hands on money or assets if they are transferred over in time.

The property tax increases are also a terribly throughout idea, how are you expecting a working family to afford them if they can somehow manage to afford the house as they will have to pay the same tax as you were expecting the elderly couple to. It will never happen anyway, there would be absolute war.

elperello

If an elderly person sells their large house and buys a smaller one they are left with a sum of cash.

If they then need to go into a nursing home on FD that cash sum will be depleted at 7.5% pa indefinitely whereas the value of property is depleted at 7.5% for just three years. There is an "allowance" of 36k for singles and 72k for a couple ie the cash sum will be depleted down to this allowance.

This is another disincentive to downsizing.

Eric Cartman

RayCun wrote: »

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

I just saw the thread title and 'taxes' and 'encourage redistribution' is all I needed to know that there was nothing of value from the OP.

Private property is one of those rights that needs to be up there and protected constitutionally just below a persons right to freedom and self determination. You cannot go ripping old peoples houses off them, its just evil.

Fol20

Assetbacked wrote: »

No, I'm talking about the staggering inequality of wealth in Irish society, predominantly down to the money being pushed up the pyramid from renting workers into the pockets of landowners. Do you think it would be fair for those who live mortgage free to only be entitled to sell their property for the price they paid for it? So if a house was bought for 20k in the 80s and was now worth 200k they should only benefit from the 20k plus the normal inflation rate (rather than the property increase rate)?

Your specifically talking about landlords here. Oddly enough, If you tax ll to Oblivian, then you won’t have any houses left to rent in the future. The wealthiest are also the most mobile so if they are taxed too much here. They can move their assets elsewhere and then the government won’t get anything. Right now the highest earners already pay proportionately the most in tax, yet you want to tax them even more.

How about they lower hap, jsb and make it less attractive for people not to work. How about if they broaden the tax base so at least everyone pays a little tax and has some skin in the game. I’m sure they won’t want to do this as then the people who always want something for nothing will be coming out in droves when ironically the normal hard working people have been already bending over backwards for decades paying tax

Assetbacked

There is wide agreement here that more houses are needed and it is as simple as that in respect of the solution, we all accept it. As the houses are not bei g built and there are NIMBY objectors obstructing that, the alternative options to simply building the properties now, such as increased property and inheritance tax etc are not popular so quite simply we need to just have the government intervene to get the properties built.

However, I notice a lack of replies to the comment about house prices dropping at least 50% - if the market was flooded with properties to allow for this to happen, would this cause a concern?

The properties worked hard for would still be there for those that feel injustice at being targeted just for the fact they own their home and the housing crisis would be solved, which is all anyone ultimately wants, with a more sustainable market. Win win for all of us and let's close this topic as everyone is now happy, we all put pressure on together for the one solution.

Assetbacked

Fol20 wrote: »

Your specifically talking about landlords here. Oddly enough, If you tax ll to Oblivian, then you won’t have any houses left to rent in the future. The wealthiest are also the most mobile so if they are taxed too much here. They can move their assets elsewhere and then the government won’t get anything. Right now the highest earners already pay proportionately the most in tax, yet you want to tax them even more.

How would a house, as an asset, be moved elsewhere? This entire point is flawed.

Assetbacked

Eric Cartman wrote: »

I just saw the thread title and 'taxes' and 'encourage redistribution' is all I needed to know that there was nothing of value from the OP.

Private property is one of those rights that needs to be up there and protected constitutionally just below a persons right to freedom and self determination. You cannot go ripping old peoples houses off them, its just evil.

Ripping old people out of houses - what is this, commies coming in and physically removing old people from their homes?

Read this carefully - the competing interests attempted to be balanced here are young people trying to get a home for their future and their family as against the older people. It's not ripping people out of their houses but balancing competing interests and looking to a sustainable future.

elperello

"Read this carefully - the competing interests attempted to be balanced here are young people trying to get a home for their future and their family as against the older people. It's not ripping people out of their houses but balancing competing interests and looking to a sustainable future."

I read it carefully.
I reject your proposition.

Assetbacked

elperello wrote: »

"Read this carefully - the competing interests attempted to be balanced here are young people trying to get a home for their future and their family as against the older people. It's not ripping people out of their houses but balancing competing interests and looking to a sustainable future."

I read it carefully.
I reject your proposition.

Who is ripping people out of their homes then?

elperello

Assetbacked wrote: »

Who is ripping people out of their homes then?

I don't know.
I never used that phrase.

Assetbacked

elperello wrote: »

I don't know.
I never used that phrase.

You defended a poster who did and my point was that it is about balancing interests and that those are the interests being balanced. It is not about sucking the wealth out of property to fund the Red Army but quite simply about attempting to marry the competing interests.

Prompting a property owner to sell up and adjust their lifestyle if they can't afford their house due to the requirement for society to view property wealth as something to attempt to target in order to fund the lower rungs of the property ladder, as against a young family with no security in the future. These are the competing interests! I'm not talking about HAP or layabouts but ordinary working families.

Unless you can demonstrate how it is not about these interests then I have to say you are a selfish, greedy person with no consideration for others.

elperello

Assetbacked wrote: »

You defended a poster who did and my point was that it is about balancing interests and that those are the interests being balanced. It is not about sucking the wealth out of property to fund the Red Army but quite simply about attempting to marry the competing interests.

Prompting a property owner to sell up and adjust their lifestyle if they can't afford their house due to the requirement for society to view property wealth as something to attempt to target in order to fund the lower rungs of the property ladder, as agsinst, but still being in comfort versus a young family with no security in the future.

Unless you can demonstrate how it is not about these interests then I have to say you are a selfish, greedy person with no consideration for others.

No offence but I was not defending anyone. I have read all the posts in this thread and I am just rejecting your proposition.

Come back some time in the future and I will consider it again.
What you are proposing is a radical change of the rules in the last ten minutes of the match.

Older people did not sign up to what you are proposing. They worked, paid mortgages, saved and did their best for their children and their own parents.

They don't deserve to be made scapegoats for the failure of housing policy.

Assetbacked

elperello wrote: »

No offence but I was not defending anyone. I have read all the posts in this thread and I am just rejecting your proposition.

Come back some time in the future and I will consider it again.
What you are proposing is a radical change of the rules in the last ten minutes of the match.

Older people did not sign up to what you are proposing. They worked, paid mortgages, saved and did their best for their children and their own parents.

They don't deserve to be made scapegoats for the failure of housing policy.

Okay, fine. I acknowledge property tax increases to move old people on to a different lifestyle are not popular. I agree that the solution is flood the market with properties. However, this isn't happening and there is reluctance to do so for some reason - I'm wondering if perhaps the reason this isn't happening is because people would be terrified of their house losing 50% plus of its value if the house was at average price or higher (this just seems a more reasonable price point as against average salaries)? Because if that is what is stopping the market being flooded then I think it is quite clear that property owners are just greedy and will fight any measure they perceive as a slight attack on their property.

Assetbacked

elperello wrote: »

No offence but I was not defending anyone. I have read all the posts in this thread and I am just rejecting your proposition.

Come back some time in the future and I will consider it again.
What you are proposing is a radical change of the rules in the last ten minutes of the match.

Older people did not sign up to what you are proposing. They worked, paid mortgages, saved and did their best for their children and their own parents.

They don't deserve to be made scapegoats for the failure of housing policy.

I also agree they shouldn't be made scapegoats for the housing crisis failure but the nature of this situation being a crisis means that the state will need to spend more and more on welfare in order to fund the tens or hundreds of thousands needing to be housed by the state in their old age. As well as the older people suffering, we are going to find more and more young working people looking to get settled and build for their future suffering in the next 5-10 years.

simonw

Assetbacked wrote: »

Okay, fine. I acknowledge property tax increases to move old people on to a different lifestyle are not popular. I agree that the solution is flood the market with properties. However, this isn't happening and there is reluctance to do so for some reason - I'm wondering if perhaps the reason this isn't happening is because people would be terrified of their house losing 50% plus of its value if the house was at average price or higher (this just seems a more reasonable price point as against average salaries)? Because if that is what is stopping the market being flooded then I think it is quite clear that property owners are just greedy and will fight any measure they perceive as a slight attack on their property.

It's banks that wouldnt want a 50% drop in house prices, since everything on their books would suddenly be in negative equity. But it's not up to them, it's a failure of government housing policy.

And where does 50% come from? Just a number you made up?

elperello

Assetbacked wrote: »

Okay, fine. I acknowledge property tax increases to move old people on to a different lifestyle are not popular. I agree that the solution is flood the market with properties. However, this isn't happening and there is reluctance to do so for some reason - I'm wondering if perhaps the reason this isn't happening is because people would be terrified of their house losing 50% plus of its value if the house was at average price or higher (this just seems a more reasonable price point as against average salaries)? Because if that is what is stopping the market being flooded then I think it is quite clear that property owners are just greedy and will fight any measure they perceive as a slight attack on their property.

You are probably ahead of your time. With forward planning and the proper range of accommodation being available some of what you propose might work.

I'm not sure that ordinary people approaching old age worry too much about the value of their property. I am only going on my personal experience here but I have known a lot of older people. The over-riding concern seems to be to stay in their home. An old friend of mine went so far as to be brought back home to die as the end approached.

There may be some greed among home owners who are buying as an investment.

Busy day tomorrow must go.

Geuze

Rayan Gorgeous Apostrophe wrote: »

This “wealth inequality” nonsense is getting boring to read about. It’s nothing but begrudging those who do well and trying to steal their money which should be theirs and their families and giving it to strangers who weren’t as successful. Tough luck is all I can say. The government should have no hand whatsoever in interfering in a family accumulating money.

Property taxes should be abolished never mind this rubbish of punishing home owners to fund layabouts, particularly older home owners. CAT is also an abomination and should be totally scrapped (well for transfers within the family anyway) as it has been in many countries. Parents should be able to gift anything they want completely tax free to their children. At least the taxfree threasholds are being increased every year and this will continue along with the fact a person who actually does some tax planning can not only minimize the CAT they pay but also avoid the fair deal getting its hands on money or assets if they are transferred over in time.

The property tax increases are also a terribly throughout idea, how are you expecting a working family to afford them if they can somehow manage to afford the house as they will have to pay the same tax as you were expecting the elderly couple to. It will never happen anyway, there would be absolute war.

I agree with much that you say.

CAT and CGT rates are too high at 33%.

20% or 25% would be enough.

But please note that local property taxes are very sensible, and better than 50% income tax rates.

Better to cut marginal tax rates than the LPT.