Housing isn't a source of unearned wealth

It’s not difficult for the government to stay ahead of these “smart ideas”

I’m no CGT expert. I haven’t looked at if since I did my tax exams but if used to build in an indexation allowance which indexed the purchase price in real terms to ‘todays’ values. It’s been done away with though for some years, replaced by goodness knows what, but the mechanism to index gains has been used in the past.

And if you make a gain not a loss you can set that against any other capital gains you make in that year, you don’t get cash back.

Won’t necessarily go in care home fees as the next generation becomes more savvy. Sell your house, rent and enjoy the money, passing it on early. It just requires a bit of planning, obvs you don’t know when you’ll due but if you start early enough it should work out pretty much.

Sorry, my daft mistake - THEY paid 1% of what dd paid - so £3k - as dh found out after a good old nose on the Land Reg.

I had baked beans and some milk chocolate digestives for £1.00 on sale at Co-op. According to some, this makes me privileged.

Looks like no one will inherit anything then. Except care home owners.

Still unearned by beneficiaries. Still choices. IHT still somewhat redistributes inherited wealth.

It’ll mostly go in care home fees anyway, which have to be paid before anyone inherits anything.

An average house value of £270k, of which 20k (I think) doesn’t go on care home fees. An average care home cost of £1250 per week. So two years for a couple, almost exactly. That’s it. All gone.

if you are leaving a house worth £1m plus that isnt a typical 'hardworking family making sacrifices' IMO

My family did work hard but they just got lucky that the cheap bit of London they could afford went through huge gentrification.

All depends on where you live though. £500k to 1mill in the south east is far less property than £500k - 1mill in other areas of the country

But it’s still a lot to inherit. Prices need to stagnate & wages need to catch up. London hasn’t seen much growth in years because affordability does matter. Much of the property market was fuelled by equity gains & cheap borrowing.

A 500k mortgage incurs 100k of additional interest at 1.5%, at 5% it’s 380k!!!!

But the same rules would apply if they had invested their money in stocks and shares. Why should landlords be any different?

@Itchthescratch IHT does not restrict who you can leave your estate to. Estates are liaible for IHT, not people, so all it means is tax will have to be paid before beneficiaries get their cut. Yes that may mean a house has to be sold, bit unless you leave it to one single person it will probably be sold any way.

Most people do not leave eatates large enough to pay much, if any, IHT.

Oh definitely! I was just making the point you can spend hardly anything & still make money. It was luck. The house i’m in now is a different story.

All depends on where you live though. £500k to 1mill in the south east is far less property than £500k - 1mill in other areas of the country

Not sure where the OP is getting her data from. I live in an average 3 bed detached that has always been valued around that of the average national price for Uk. In 2006 it was around £170000 it’s now valued around £301000 so about 45% increase. We actually bought it in 1995 for £73000. This was at the bottom of the market and I had lost £10000 on my previous house so net cost was more like £83000. Overall growth has been fairly steady with the value doubling every 10yrs. There was a bigger increase in the first 10yrs but since the market had suffered a big collapse in the early 90d and was pretty stagnant for a number of years it evened out the gain.

Property buying is always a long term investment unless you buy and sell rapidly within a period of rapid growth. If you are just buying for residential reasons then it’s definitely a long game.

Average annual inflation has run at 3.20% over the last 20 yrs but there has been a couple of spike years associated with the pandemic and currently the fuel crisis. Great if you have savings but not so good for cost of living. So most years inflation has been closer to 2%. The spikes in inflation have led to interest rates increasing which impact the housing market. Some may say that stagnation of the current market is needed to allow wages to catch up. Ok if you don’t need to move, but a problem for those that want to move up the property ladder.

Strictly speaking there isn't. The billionaire's beneficiaries will just pay more tax.
(Except they don't pay all of it because they can afford to pay tax advisors to reduce it, but that is not what we are discussing here).
There is an allowance. Which is £500k if leaving a house to DC or GDC, and surviving spouses can use their partners allowance as well. So in house terms for a married couple leaving their main residence to DC or GDC there is a £1m allowance. 40% paid on the value over that.
if you are leaving a house worth £1m plus that isnt a typical 'hardworking family making sacrifices' IMO.
And it does not change the fact that beneficiaries didnt earn that money. The parents made choices.

I also agree. There needs to be more distinction made between those investing in property for gains and those buying a family home. We had to pay a lot of stamp duty when we bought our home together because although I was a first time buyer my partner was not, and he sold his flat to move into the new house with me. They shouldn't charge people starting out in life ridiculous taxes just for wanting a family home.

Which is where most of it ends up. Still you were lucky to get £200k to go towards for just painting.

But doesn't that £87k allow them to buy a larger house which frees up an affordable house for you!

Well some of it went on stamp duty for the next move.

Aren’t you the lucky one! Did you pay any tax on that unearned wealth increase 😜

Or parents who have sacrificed and worked hard to leave something to better their children.
There is a huge difference to being a billionaire leaving a countries GDP to some spoilt influencer wannabe and someone with a family run business, where sacrifices have been made.

I made 200k on my flat in 2 years, all I did was paint it once.

Yes they have : CGT is only payable when the asset is actually sold and they have actual cash money in their posession which is £100,000 more than they would have if they had left the original £400,000 under a mattress for 5 years and that additional cash money is worth exactly the same as the £100,000 earned by the owning wage-earner

Property definitely hasn't been as good an asset in the last 10-20 years as it was previously. Yes, in some places it has worked well, but it isn't the booming business it used to be, partly due to taxation (which is much more than CGT for second home owners, higher stamp duty, council tax, income tax on any rent). And thresholds have been reduced in the last few years making higher proportions taxable, with rates also increasing. There is a legacy belief that you can make a lot of money from property. There is definitely potential, but it isn't as lucrative as the 80's-00's. But honestly, instead of complaining about it, diversify your investment. The stock markets have performed comparatively much better, and you can make larger portions tax free by using ISA's.

However, as a multiple home owner (which you would be for CGT to be a concern), you are significantly more wealthy than the majority of the country, with a large portion of younger generations struggling to buy just one, and who are frustrated that they can't afford to buy with earnings much lower proportionally to property values. Better tax planning as the changes were introduced over the last few years could have helped reduce any future tax bills you are now potentially liable for. You have clearly chosen not to sell a second/third etc property, but are complaining about the way it is now taxed?

But what investment did they make into the property? When a kitchen can cost £15-20k and a bathroom £10k, carpets £2-3k, any building work done in that time? Suddenly £87.5kprofit becomes £45-50k profit over 20 years