Housing isn't a source of unearned wealth

Absolutely agree, that most of our governments have mismanaged the housing market goes without saying- there is an insane amount of house building going on , but it won't bring house prices down- which would be the only justification for it, there is plenty of housing unused and until that is all utilised house building is unconscionable. huge amounts of foreign investment keeps supply low and high immigration levels keep demand high- it's an insane situation.

The £1m tax free is not correct. It’s £325k per person rising to £500k per person if you’re leaving your estate to your children or grandchildren. A spouse can benefit from the other spouse‘s limit.

No, house prices had taken a plunge at that time as it was October and the Liz Truss’s mini budget. The peak was in the spring. And yes, comparable houses in that area are currently going for £600k this year.

Regardless, landlords still benefit from rental income, leverage from mortgages, paying down debt with inflated currency And tax-free gains on primary residences via principal private residence relief. Definitely not a cut and dried real term loss – not at all.

They won't pay tax if it's not appreciated in value because there won't be a gain.

You’re clearly right op. Facts can’t be disputed, and houses cost money to maintain. People pay a lot more than the purchase price due to the interest on mortgages, but still people who can’t get on the ladder are resentful.

They won't have done though because they will most likely have been paying interest on a loan which bought the house and no doubt have spent significant amounts maintaining and improving the property.

It’s a nice idea, but then how do we not also apply that income? Should we say that someone on £100k should only be taxed as if it were £85k because wages haven’t kept up with inflation? Should we only charge VAT on 50% of the food bill or electric bill because the costs have far exceeded inflation?

It gets too complicated and too contentious.

Making housing an asset & ever increasing growth a key driver of the economy has fucked up the economy.

@Itchthescratch I don't know how we'd ever arrive at a fair conclusion for factoring in inflation into tax though

By that reckoning, my income tax should be lower.

I think taxes become a bit of a runaway train but it would be easier to lower the rate of CGT and IHT.

We need to get over the idea that every homeowner is sat on a money making asset

Starting a thread about it is hardly getting over it

There is far too much money tied up in housing & incomes have had a batting. Governments don’t really have any other option.

I think 1m max IHT free is fine, my parents house is over that

True, housing is not a source of wealth- it's a store of wealth, which means it will still be seen as a legitamate target for taxation in the future.
Britain has always been obssessed with property owning- the idea the government wants to tap into that is no real surprise.

Houses are now worth the same as they were worth 20 years ago in real terms.

This may or may not be true. In many places the value of a house has increased faster than inflation. The UK average is 74%, which exceeds the 65% of inflation. The SE and southern part of England has increased by an average of 86%.

Also, you must consider that average income has increased slower than inflation. So a person who earned £1 twenty years ago now earns 85p.

Too, any increase in the value of an asset is a type of unearned wealth. The only wealth that is earned are payments for services rendered or goods sold.

Why is the state pension triple locked against inflation?

That was a mistake, triple lock should be paused. But that won’t go down well.

Isn't that true for most people?

Using the post upthread as an example. If I bought a house for £450k in 2018 then I would need to sell it for £600k to break due to inflation and the purchasing power decrease that I would encounter in 2026. If I sold at say £500k and made a real terms loss then HMRC would be looking to tax that £50k as profit when it obviously isn't profit at all

Investments are not guaranteed. If you want to allow for inflation how would that work if gains beat inflation? Pay more?

The "double taxation" argument against IHT is mad - all sort of stuff is double taxed. I am "double taxed" every time I buy any good or service that is subject to VAT. I was "double taxed" when I paid stamp duty. What is so special about the estates of deceased people that they should not be "double taxed".

Depends where you are. A lovely Victorian flat bought for £40,000 in the late eighties in my town is for sale for around £280,000 now, forty years later.

But if in real terms you are actually losing wealth then why should you be taxed on nominal gains

Why do you think income tax bands havent been uplifted in line with inflation?