Recent searches
Search options
While unpopular, and would undoubtedly create some very angry (and vocal) losers, as Polly Toynbee concludes subjecting all house sales to capital gains tax (i.e. removing the exception for primary residences) would be a good ay to start to reverse the asset price inflation at the heart of the UK housing crisis.... its not a sufficient solution but its a necessary part of any housing package that is going to really deal with the dysfunctional housing market!
#housing
https://www.theguardian.com/commentisfree/2024/dec/03/george-osborne-wealth-tax-labour-inheritocracy-work-keir-starmer-rachel-reeves
⧖ @ChrisMayLA6 Would that not make it impossible for people to sell and relocate for work? Whatever your home may sell for you’re likely to need every penny of what the value has become just to buy an equivalent. You’re not richer, the numbers have just got bigger. CGT would just be a tax on mobility for home owners.
Yes, there would need to be some thought about how to deal with that issue, but as the idea is to depress house prices in the medium term, there is going to be social costs in the short-term for any policy....
On moving for work, one way to do that would be to offer CGT tax rebates in certain circumstances?
But every allowance opens up the chance to game the system...
Of course we also need to build more (and more appropriate) homes!
@ChrisMayLA6 @christineburns personally I doubt it would have much impact on house prices. Most would end up chucking the tax payment on their mortgage meaning they likely end up paying more long term but will mean less impact in house price.
You may also get more of the transaction cost separated from the house price (eg fixtures and fittings) which would not be liable to the tax.
Ultimately is the tax about raising money or dropping prices?
In this case about reducing house prices, so your concerns are I think a(nother) issues that would need to be resolved for the CGT to do what Toynbee (and also me) would like to see it do
@ChrisMayLA6 @christineburns The usual way to solve the issue of Capital Gains Tax being immediately due on the sale of an asset is to allow it to be rolled-over if a new equivalent asset is purchased. That would solve the problem of people moving for work or similar reasons.
Thanks, very elegant solution.... boosted
@KimSJ @ChrisMayLA6 @christineburns That was done when I was still in the UK, admittedly over 40 years ago: no CGT if you bought a first residence of at least the same price as the one you sold to get it.
Of course, that completely stuffs the pensioners who sell their family home to move into a smaller one that they can cope with...
@ChrisMayLA6 @christineburns There are already problems relocating for work. I fell into one of these when I moved to Cambridge. I bought somewhere to live in Swansea, where property prices were very low and it was affordable (when I was looking, there were terraced houses on the edge of town for £85k! That wouldn’t even buy a studio flat in Cambridge when I moved here). When I moved here, the deposit on a cheap place was close to the total price in Swansea. My job started as a fixed-term one-year contract, so I rented out the place I owned and rented somewhere here (the fact that living in Cambridge on a postdoc salary was affordable only because I had additional income from that rental is a different issue). When I decided to properly relocate here, after four years, I’d been renting out my Swansea place for too long for it to count as a primary residence for stamp duty purposes.
@david_chisnall @christineburns
Yes, a difficult position to find oneself in... and a link to one of my other concerns; employment in high education...
I think the opposite would be true, it would increase inflation for the single reason of paying the buyer the CGT tax.
But movement from low value (though perfectly good) housing to extreme value housing would become even harder.
Tax is a terrible method for controlling prices, it's an internal form of tariffs.
I can see that might happen, but how do you feel about @KimSJ solution of the roll forward for a 'similar' asset?
That it interferes with individuals' transactions.
What if there's a surplus after the future purchase?
If it's financed by either rolling over or by raising prices housing inflation still happens so it's all pretty pointless.
@ChrisMayLA6 A particularly fortunate result from the truncation algorithm on the preview I feel.
