Using Property Taxes to Encourage Redistribution of Family Homes

Graham

elperello wrote: »

What you are proposing is a radical change of the rules in the last ten minutes of the match.

It wouldn't be much of a stretch to suggest the rules have already been changed significantly in favour of those already on the property ladder.

Buyers of new builds are now effectively shouldering a disproportionate contribution for the provision of social/affordable housing, water and local authority services.

Assetbacked

simonw wrote: »

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?

The 50% just comes from the average salary in Ireland being around €40k and the average house price in Dublin being €375k. Salaries haven't skyrocketed with house prices and are unlikely to skyrocket ever but if house prices were 50% of the €375k average as a new average then we would have a lot of people in home ownership with greater security for their future meaning greater stability in society.

If the government have a 2040 plan then there could be a 5,10,15 etc plan to work towards ensuring the gap between house prices and salaries decreases.

If someone can afford to live in a house worth €375k they can afford to live in a house worth €200k.

beauf

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.

Yes there is some mass conspiracy of property owners controlling the market.

You've nailed it.

beauf

Assetbacked wrote: »

The 50% just comes from the average salary in Ireland being around €40k and the average house price in Dublin being €375k. Salaries haven't skyrocketed with house prices and are unlikely to skyrocket ever but if house prices were 50% of the €375k average as a new average then we would have a lot of people in home ownership with greater security for their future meaning greater stability in society.

If the government have a 2040 plan then there could be a 5,10,15 etc plan to work towards ensuring the gap between house prices and salaries decreases.

If someone can afford to live in a house worth €375k they can afford to live in a house worth €200k.

The solution is to live somewhere cheaper, or earn more money.

Assetbacked

beauf wrote: »

Yes there is some mass conspiracy of property owners controlling the market.

You've nailed it.

Oh, grand. So you're telling me there's no reluctance to move property prices down to more sustainable levels and use average salaries to be the barometer of sustainable levels?

Perfect, again in agreement.

Assetbacked

beauf wrote: »

The solution is to live somewhere cheaper, or earn more money.

The jobs are focused in Dublin. Earn more money? Wages aren't growing to match property and rent price increases.

Your cold-hearted, snout in the trough attitude is seeping through now.

beauf

Assetbacked wrote: »

Oh, grand. So you're telling me there's no reluctance to move property prices down to more sustainable levels and use average salaries to be the barometer of sustainable levels?

Perfect, again in agreement.

Explain how property owners can move property prices.

beauf

Assetbacked wrote: »

The jobs are focused in Dublin. Earn more money? Wages aren't growing to match property and rent price increases.

Your cold-hearted, snout in the trough attitude is seeping through now.

Its just maths.

Do you move to London and demand they drop property prices for you.

Its ridiculous.

Assetbacked

beauf wrote: »

Explain how property owners can move property prices.

They dont need to do anything, given the strong and widespread reluctance to pay any sort of increased property tax or deal with a measure which aims to take money from them, we just proceed with the policy of quick and mass apartment and house building to meet the requirements of the population which will then reduce demand. With enough properties the demand will reduce and prices will fall.

LirW

I still didn't get how the market would be flooded with propererties in order for the prices to come down 50%.
If you heavily push for older people to downsize, you're shifting a problem, it wouldn't create a huge supply all of a sudden because old people would generally want to stay in their area for a variety of reasons. And unfortunately many areas don't have anything to downsize and it would create a new demand in smaller properties that simply aren't there.
I agree more building needs to happen and I can't stress enough that good apartments need to be built in order to utilize the space Dublin has properly and sustainably in the long term.

Excuse my ignorance, I really didn't get where all the properties should come from.

Assetbacked

LirW wrote: »

I still didn't get how the market would be flooded with propererties in order for the prices to come down 50%.
If you heavily push for older people to downsize, you're shifting a problem, it wouldn't create a huge supply all of a sudden because old people would generally want to stay in their area for a variety of reasons. And unfortunately many areas don't have anything to downsize and it would create a new demand in smaller properties that simply aren't there.
I agree more building needs to happen and I can't stress enough that good apartments need to be built in order to utilize the space Dublin has properly and sustainably in the long term.

Excuse my ignorance, I really didn't get where all the properties should come from.

Yes, just by building them. The problem is that there is too much housing being objected to and blocked in Dublin so alternative measures to building could be looked at. A lot of apartments as opposed to houses is what Dublin badly needs given the influx of young, somewhat impermanent workers (at least with the current housing situation they won't hang around).

ESRI reporting on housebuilding as set out in today's IT https://www.irishtimes.com/business/economy/foreign-workers-are-required-to-meet-housing-targets-says-esri-1.3704884?mode=amp

"Supply vs demand
The number of new homes constructed in the State this year is expected to be in the region of 19,000. The ESRI estimates the level of housing demand is closer to 30,000.

The mismatch between supply and demand has seen average rents in Dublin soar to nearly €1,600 a month, €500 higher than they were in 2008.

Because wages have not risen by the same rate, many households are now spending up to half their income on housing."

Assetbacked

Assetbacked wrote: »

Oh, grand. So you're telling me there's no reluctance to move property prices down to more sustainable levels and use average salaries to be the barometer of sustainable levels?

Perfect, again in agreement.

Assetbacked wrote: »

The jobs are focused in Dublin. Earn more money? Wages aren't growing to match property and rent price increases.

Your cold-hearted, snout in the trough attitude is seeping through now.

You may well have some valid points. Your sneering tone in the above two posts is doing you no favours. I get that you're not here to make friends, but if you want people to engage with you meaningfully you could maybe tone it down a smidgeon.

You are correct to point out the hypocrisy of the likes of RBB and the NIMBY culture. Same goes for Sinn F who essentially control Dublin City Council and refuse to lift the height restrictions across the city, while bleating about those in power's refusal to address the situation.

Assetbacked wrote: »

They dont need to do anything, given the strong and widespread reluctance to pay any sort of increased property tax or deal with a measure which aims to take money from them, we just proceed with the policy of quick and mass apartment and house building to meet the requirements of the population which will then reduce demand. With enough properties the demand will reduce and prices will fall.

An increase in property tax is not fair and equitable. Yes, those who have more should pay more (and should be willing to pay more), but owning your own home is the most illiquid and under-realised form of wealth in the country.

Is it fair that a two bed around, say, East Wall is worth twice as much as a 4-bed in, for example, Balbriggan? Why, then, should a retired set of grandparents be forced to pay double the LPT of a young couple in the 'burbs? Or is it fairer to view the relative incomes of the occupants of both properties and tax that accordingly? You know, like already do.......

beauf

Assetbacked wrote: »

beauf wrote: »

Explain how property owners can move property prices.

They dont need to do anything, given the strong and widespread reluctance to pay any sort of increased property tax or deal with a measure which aims to take money from them, we just proceed with the policy of quick and mass apartment and house building to meet the requirements of the population which will then reduce demand. With enough properties the demand will reduce and prices will fall.

None of that has anything to do with landlords or property owners, elderly or otherwise. So all the previous stuff was just babble.

Now maybe you'll go and research how increased supply can be delivered and what factors have delayed and influenced that.

You should also look at other cities and counties. Because this is not unique to Ireland.

Also we've had emigration for many generations. When I left college the vast numbers of graduates emigrated to find work. It was the norm.

These days if you suggest people should consider living not in Dublin, not in Ireland they throw all the toys out of the pram. Go experience the world outside the tiny bubble that is Ireland and Dublin.

ELM327

beauf wrote: »

The solution is to live somewhere cheaper, or earn more money.

No no, "de gubbernment" (read "anyone more well off than me") needs to pay for my free/subsidised house. Can't be earning more money or move away from memmeh don't you know !

Plenty of 2-3-4 bed houses in Meath, Kildare, etc other commuter counties for half the dublin prices.
I bought a 3 bed in Athboy for €120k. Needed a bit of work (cosmetic only as it was an ex rental) but still.

I wanted to live in dublin but wasn't prepared to pay multiples of that 120k for a house in a bad area. If you can't afford it, move! Simples.

Cyrus

Assetbacked wrote: »

They dont need to do anything, given the strong and widespread reluctance to pay any sort of increased property tax or deal with a measure which aims to take money from them, we just proceed with the policy of quick and mass apartment and house building to meet the requirements of the population which will then reduce demand. With enough properties the demand will reduce and prices will fall.

you realise why there is a widespread reluctance for an increased property tax? its the fact that anyone earning any sort of reasonable salary pays more tax than what they take home on each incremental euro.

given that most peoples mortgages are aligned in some with their salary an increase in property tax is going to be a struggle for them.

but yeah tax the rich :rolleyes:

Fol20

Assetbacked wrote: »

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

It wouldn’t be moved elsewhere and I didn’t say that. I said that if there is enough of a wealth tax on rental property, it will eventually make landlords rethink their investment strategy and potentially make it more viable to move elsewhere thus decreasing rental stock supply.. how you read that property can be “moved” in my comment is flawed.

If you implement something like this. There will be knockon effects such as elderly couples, rental market etc.

Fol20

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 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.

You said it yourself, it’s about balancing interests. People already pay 50pc in tax and you want to tax them more through a wealth tax. What would you like their through tax rate to be?

You need to make it balanced in that hard work, effort and applying your skills are rewarded accordingly. By taxing too much, Ireland will become inefficient on a global scale and we could turn into countries like Italy where their no longer a dominant force since they are so uncompetitive.

Scandinavian countries get away with taxation as they have a lot of natural resources to cover their economy. We do not.

Other countries like USA have much higher property taxes however their income taxation is much lower so it balances out.


You basically want to have all the cake and eat it without non of the cons. With a system like this coupled with our current taxation. It’s always take take take and no give.

Our government are so well known for managing our money you want to give them more of it to squander, I mean invest

The Student

Assetbacked wrote: »

The jobs are focused in Dublin. Earn more money? Wages aren't growing to match property and rent price increases.

Your cold-hearted, snout in the trough attitude is seeping through now.

Your second paragraph speaks volumes about your own attitude and the language you have used.

You refuse to accept the basic fundamentals of economics regarding supply and demand. We need more accommodation of that there is no doubt.

But forcing people to downsize through draconian measures on assets they have worked all their lives for is wrong. Exactly how many times do you want to tax people on the same euro.

They have paid very high income tax, they have paid interest on vat when the property was built, they have paid double digit interest charges, they will pay inheritance tax if above thresholds.

These people have worked and made sacrifices to house themselves, pay all the costs associated with housing themselves, worked to minimize the need for State support and you now want to tax their wealth.

Despite what you believe they are not wealthy. So what if they want to leave something to their children. They have worked for what they have and made sacrifice's to be in the position they are.

Life is all about choices, we have some people who succeed in life and some who don't that's just life. If somebody makes the wrong decision in life they need to live with the consequences and not expect society to "look after them".

LirW

Assetbacked wrote: »

Yes, just by building them. The problem is that there is too much housing being objected to and blocked in Dublin so alternative measures to building could be looked at. A lot of apartments as opposed to houses is what Dublin badly needs given the influx of young, somewhat impermanent workers (at least with the current housing situation they won't hang around).

ESRI reporting on housebuilding as set out in today's IT https://www.irishtimes.com/business/economy/foreign-workers-are-required-to-meet-housing-targets-says-esri-1.3704884?mode=amp

"Supply vs demand
The number of new homes constructed in the State this year is expected to be in the region of 19,000. The ESRI estimates the level of housing demand is closer to 30,000.

The mismatch between supply and demand has seen average rents in Dublin soar to nearly €1,600 a month, €500 higher than they were in 2008.

Because wages have not risen by the same rate, many households are now spending up to half their income on housing."

I fully agree with the aspect of building. This is a complex issue in itself though because the wide population still thinks you can't raise a family in an apartment. Yes you can, given you built apartments with enough storage and generous rooms, it's done all over Europe. Seriously it's time to move on from the Ballymun disaster.
I certainly wouldn't have a problem moving into a 3 bedroom apartment with 100-120 sqm, given it's done well, the walls aren't paper thin. I grew up in apartments, some didn't even have communal areas on site and it's not bad at all.
There can't be an infinite growth and building yet another estate with semi-Ds is a waste of badly needed space.
As long as this isn't going to change, house prices won't change. I get the feeling that a lot of people want to have their cake and eat it. Solve the housing crisis, but not near me. Build apartments but not near me and certainly not for me, the others can have it. Build more social housing but not near me.
People can certainly adapt, but there's no will to do it.

We're at a point where companies struggle to attract qualified staff to relocate because rent is crazy. Shouldn't that be the point to wake up?


But all that aside, this has little to do with taxing the bejaysus out of property. 400k is an awful lot of money but in the context of Dublin it doesn't buy you a fancy gaff. You can have a pretty basic 3bed ex corpo in Marino for that money. Or a two bedroom apartment in Glasnevin. People putting a roof over their head for that money are hardly wealthy. If they have kids, the money will be split between them which is most likely going into property again which again is not going to buy you a castle.
There's wealth and then there's wealth. A middle class family in a house worth 400k isn't wealthy or rich, they have an asset after paying a long mortgage but it's not the same as someone who really is loaded in a way that they have to park their cash in networks of charities or so in order to avoid tax. The average family isn't the problem with wealth hoarding. A lot of properties are eventually used to look after them (FD).
If the average family is taxed so high on their "wealth" that they won't be passing anything on to their children, the children as well start at nil, while it still wouldn't change anything about the problem that there simply isn't enough property around for average people.

Fol20

Assetbacked wrote: »

The jobs are focused in Dublin. Earn more money? Wages aren't growing to match property and rent price increases.

Your cold-hearted, snout in the trough attitude is seeping through now.

How is his comment cold hearted?

It’s a pragmatic approach which you seem to be in denial of and what other people to suffer for, if it is not affordable to certain people. Dublin has the highest paid jobs and the highest costs. You seem to want to highest paid jobs without the costs associated with it

jjmcclure

RayCun wrote: »

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.

"Wealth" that people have worked for and paid tax on all their life.


Socialism is a failed concept. If you want a house, get of your arse and work for it.


AND this is a socialist fantasy, NO government would ever dare to propose this policy. It would be like cutting public sector pay

Fol20

I actually dont understand why some people begrudge people that have been gifted houses by their family. Its another form of providing for your family, similar to putting them though college, paying their rent when they are younger, providing food, health etc. Parents want the best for their children. Some parents sacrifice their own luxuries so their kids have a better upbringing and are catered for even after they are gone. What is wrong with that?

Cyrus

Fol20 wrote: »

I actually dont understand why some people begrudge people that have been gifted houses by their family. Its another form of providing for your family, similar to putting them though college, paying their rent when they are younger, providing food, health etc. Parents want the best for their children. Some parents sacrifice their own luxuries so their kids have a better upbringing and are catered for even after they are gone. What is wrong with that?

everything apparently :rolleyes:

Amirani

Fol20 wrote: »

I actually dont understand why some people begrudge people that have been gifted houses by their family. Its another form of providing for your family, similar to putting them though college, paying their rent when they are younger, providing food, health etc. Parents want the best for their children. Some parents sacrifice their own luxuries so their kids have a better upbringing and are catered for even after they are gone. What is wrong with that?

At modest levels it's fine. But it's easy to see the problems at higher levels; Paris Hilton being a commonly cited example. In the US the tax-free threshold from Federal Estate tax is like $11m or so. At those levels, generations and generations are born in to wealth, with no requirement to work.

It's all well and good someone working hard and passing something down. But is that still fine if it's great grandchildren etc.? Why should people be able to "earn" large amounts of money untaxed, when someone a similar age, who's had a similar life have to pay 50% tax when they "earn" the same amount from their labour?

I'm not sure why tax on labour income seems so much fairer than tax on capital income? Particularly when the first requires far more work on the part of the recipient.

LirW

Amirani wrote: »

At modest levels it's fine. But it's easy to see the problems at higher levels; Paris Hilton being a commonly cited example. In the US the tax-free threshold from Federal Estate tax is like $11m or so. At those levels, generations and generations are born in to wealth, with no requirement to work.

It's all well and good someone working hard and passing something down. But is that still fine if it's great grandchildren etc.? Why should people be able to "earn" large amounts of money untaxed, when someone a similar age, who's had a similar life have to pay 50% tax when they "earn" the same amount from their labour?

I'm not sure why tax on labour income seems so much fairer than tax on capital income? Particularly when the first requires far more work on the part of the recipient.

But 99% of the population aren't Paris Hilton.
If you have a house in Dublin worth 400k and this is split between four children, they will probably sell it and minus expenses they each go home with a bit under 100k.
On the one hand it's a lot of money but then again for Dublin it's not. That money is usually used to pay off their own debt, used as a deposit for a house or maybe a holiday home abroad and some is put away for a rainy day.

As a parent myself I want my children to have whatever I own, because I wanna provide for them. I paid tax for my house already isn't that enough?
Should there also be a tax if I decide to pay for my kids' education or if I buy them a car? Kinda follows the same logic.

Cyrus

Amirani wrote: »

At modest levels it's fine. But it's easy to see the problems at higher levels; Paris Hilton being a commonly cited example. In the US the tax-free threshold from Federal Estate tax is like $11m or so. At those levels, generations and generations are born in to wealth, with no requirement to work.

It's all well and good someone working hard and passing something down. But is that still fine if it's great grandchildren etc.? Why should people be able to "earn" large amounts of money untaxed, when someone a similar age, who's had a similar life have to pay 50% tax when they "earn" the same amount from their labour?

I'm not sure why tax on labour income seems so much fairer than tax on capital income? Particularly when the first requires far more work on the part of the recipient.

so we take an outlier example from another jurisdiction and apply it to a lack of affordable housing in ireland :P

Fol20

Amirani wrote: »

At modest levels it's fine. But it's easy to see the problems at higher levels; Paris Hilton being a commonly cited example. In the US the tax-free threshold from Federal Estate tax is like $11m or so. At those levels, generations and generations are born in to wealth, with no requirement to work.

It's all well and good someone working hard and passing something down. But is that still fine if it's great grandchildren etc.? Why should people be able to "earn" large amounts of money untaxed, when someone a similar age, who's had a similar life have to pay 50% tax when they "earn" the same amount from their labour?

I'm not sure why tax on labour income seems so much fairer than tax on capital income? Particularly when the first requires far more work on the part of the recipient.

My bloodline would be my grand children and their children etc, so i would want the best for all my family including the ones that are not born yet. It would mean i was successful in providing a better life for my family.

11m is much more than the 300k your given in Ireland. I would actually be of the opinion that inheritance should not be taxed at all. Your parents have already paid their fair share of tax to gather whatever wealth they have, as long as the wealth is transferred within the family i think it shouldnt be taxed.

If you generate new wealth incl from your inheritance, this should be taxed but not old wealth that was already taxed through your family.

I can see where your coming from and i could accept some of your points to a degree.

Assetbacked

Cyrus wrote: »

you realise why there is a widespread reluctance for an increased property tax? its the fact that anyone earning any sort of reasonable salary pays more tax than what they take home on each incremental euro.

given that most peoples mortgages are aligned in some with their salary an increase in property tax is going to be a struggle for them.

but yeah tax the rich :rolleyes:

It's about taxing wealth - the wealth is in property so tax it. That's what a progressive tax system is and that is what we have in place in Ireland.

"Rich" is not the correct term.

Assetbacked

jjmcclure wrote: »

"Wealth" that people have worked for and paid tax on all their life.


Socialism is a failed concept. If you want a house, get of your arse and work for it.


AND this is a socialist fantasy, NO government would ever dare to propose this policy. It would be like cutting public sector pay

This statement is a very dangerous definitive position to take.

We live in a democracy and people will vote for the policies which resonate with them. The vast majority of renters now are paying extortionate amounts on their rent. How big is this group of people? Well, we have something like 70% in ownership so presumably they form part of the 30%. However, these figures are rapidly moving closer together and there is zero chance of this slowing down as rents are predicted to keep climbing for the foreseeable future. The renters will become a larger and larger percentage of voters over time and therefore will have more weight in their vote. This is a simple fact. Your statement that "no government ever" is in respect of socialism but the reality is that it is not socialism which will influence the change in measures - this is more of a correction of capitalism, which would allow for more people get richer together instead of only a very small number of people getting richer.

Cyrus

Assetbacked wrote: »

It's about taxing wealth - the wealth is in property so tax it. That's what a progressive tax system is and that is what we have in place in Ireland.

"Rich" is not the correct term.

tax the wealthy, better?