AIBU to think a £2m homeowner should pay mansion tax?

I just can’t grasp why people should have to sell their home to release the equity. So an example is

My Nan lives in a standard 3 bedroom dormer bungalow. Worth approx £140,000 now, she bought it in the 60’s for £4000 so in theory has made £136,000 due to house prices rising, so going off peoples assumptions here she has that in her bank account- except she doesn’t. She lives off her state pension and her small occupational pension from when she worked as a care assistant in a day centre for the local authority.

So now we decide we tax her and she will have to sell to release the equity. However she still needs somewhere to live, shes in her 80s but lives independently due to the fact her 2 children, 4 sets of grandchildren and also x2 great grandchildren (late teens) all live on the same large housing estate. Now there are 20 bungalows on the estate but they actually sell for more than the dormers due to demand about £155/160 and she has downstairs living in her current home so she doesn’t actually need to downsize in that respect. The other alternative is she moves to a ‘cheaper’ area to downsize which would maybe be £110-£120k for a bungalow leaving 10-20k in equity. But also in the process looses her support network and the move will probably finish her off.

Yes shes not in mansion tax territory but the principal is the same, for people who bought and have made money its not in their actual pockets and house prices have gone up so for elderly to stay in their area probably with their current support network they probably aren’t going to end up with that much cash left over anyway.

The reality is is my Nan is probably never going to see that 136,000 as she will either need it to pay for a care home , or she will pass away in her current home in which case it will be released when the house is sold at the point. But she won’t benefit from it in the way posters are making out.

Ok, so using your logic, I would like to test how far it goes.

You seem pretty adamant that it's morally acceptable for the elderly man to be forced to pay this tax for no other reason than he privately owns an expensive house.

What about people in expensive social housing? They are costing the state an enormous amount of money by occupying homes worth so much and tying up public money in this way There are 110 council homes worth over £2 million. Surely these people should be forced to move and sell. In fact surely everyone in social homes over an even lower threshold should be forced to sell following the same logic. Maybe we should set the threshold at anywhere above the national average home value? Afterall you have no sympathy for people in expensive areas and think they can simply move to a cheaper area to liquidate their asset. Why doesn't this work with social housing?

@Valpolichella It IS envy and it IS ridiculous to assume anyone with a £2m house is some kind of fat cat, sat laughing on piles of unearned wealth, whilst exploiting the poor and avoiding tax.

Anyone with a house worth £2m that paid £15k for it back in 1960 (which was a lot of money back then) is a fat cat. The inflation on that is astronomical. So, no it's not envy. People need to start looking at how lucky they've been and stop being greedy bastards wanting to keep it all for themselves.

How do you know what his options are to pay it? Are you saying he should sell up just to pay this tax?

Engagement rings have outpaced inflation. Unlike a home, I don’t actually need one. I think there should be an engagement ring tax for those who have benefitted from this.

There are quite a lot of people in a similar situation to this man near to where I live. It’s a part of London that was down at heel for a long time and cheap. Things changed and property prices rocketed. There are now plenty of elderly people in 4 or 5 bedroom Victorian houses worth at least £1 million if not £2 million.

It doesn’t make sense to me to tax that gain when the gain is unrealised. At the point the elderly person dies that property will form part of their estate and be subject to inheritance tax. That seems fair to me.

Not really. Bank of England inflation calculator says that was equivalent to £250k today.

He has “had money” all his life? What, did it just fall from the sky and hit him on the head? Or did he perhaps work and earn it? Whilst also paying tax, which covers the “paid a bit more back” that you think he owes.
It IS envy and it IS ridiculous to assume anyone with a £2m house is some kind of fat cat, sat laughing on piles of unearned wealth, whilst exploiting the poor and avoiding tax. The assumption on MN that “the rich” are all like that is equally as offensive as the one that “the poor” are all feckless and workshy.

£15k 60 years ago was a significant amount of money for buying a house. Average house prices were much lower, somewhere around £2k at the beginning the 1960s.

Stories like these are put out there deliberately by the likes of the Telegraph and designed to pull on heart strings. Aw, poor old man in his 90s being pulled into the mansion tax. The truth is that he has had money all his life and its about time people like him paid a bit more back.

Both.
If someone buys a ‘mansion’ (expensive home), they pay stamp duty.
When they live in it they pay Council Tax.
If they don’t live in it, they pay double council tax.
It is obscene to then tax them purely because they own an expensive home. What about people who spend their money on cars or stocks and shares instead? Why target homes? People doing the right thing!?

To on top of that try to punish someone who has simply lived in a home for 60 years, and through no fault of their own has ended up with a high value property? They are under pressure to sell or release equity so that the government can get its mitts on money before they get to tax it on death?! It’s sick.

I don't dislike anybody but fairness is completely subjective. You have no idea if the person enjoying a lifetime tenancy in SH worth £2 million has less or more wealth than the person that owns their home. SH isn't means tested. 100,000 households in SH are in the top 20% of earners in this country. They will presumably have pretty nice pension pots to match in lots of cases and will have more disposable cash than most people due to lower rents they enjoy and lack of mortgage and interest they have to pay. They could easily have invested all this surplus income and have significantly more wealth than the person who has a large mortgage on a £2 million home they own privately.

The owner of the social housing is probably a Housing Association. It may well have less money to spend on social housing if it got hit with this tax at a time when the state is trying to achieve the opposite. Again, isn't it logical to sell the expensive social housing and rehouse people in cheaper houses? We should do this until everyone is housed as cheaply as efficiently as possible. Why not? Why isn't this ok but forcing people to move from their privately owned home due to the imposition of a mansion tax is totally ok? What's good for the goose is good for the gander.

Do you want him to sell his home to pay?

His home will be taxed when dies, as party of his estate. Can you not wait that long?

I don't dislike anybody but fairness is completely subjective. You have no idea if the person enjoying a lifetime tenancy in SH worth £2 million has less or more wealth than the person that owns their home. SH isn't means tested. 100,000 households in SH are in the top 20% of earners in this country. They will presumably have pretty nice pension pots to match in lots of cases and will have more disposable cash than most people due to lower rents they enjoy and lack of mortgage and interest they have to pay. They could easily have invested all this surplus income and have significantly more wealth than the person who has a large mortgage on a £2 million home they own privately.

The owner of the social housing is probably a Housing Association. It may well have less money to spend on social housing if it got hit with this tax at a time when the state is trying to achieve the opposite. Again, isn't it logical to sell the expensive social housing and rehouse people in cheaper houses? We should do this until everyone is housed as cheaply as efficiently as possible. Why not? Why isn't this ok but forcing people to move from their privately owned home due to the imposition of a mansion tax is totally ok? What's good for the goose is good for the gander.

Instead of making this about ways we can penalise people who have less, and don’t actually own the expensive property and therefore the asset - just make the tax fair.

If you own a £2m property, regardless of if you live in it, it’s £2.5k a year tax. The owners of those social houses pay it, the elderly chap we’re discussing here pays it, the many people a few miles from me in Prestbury pay it.

It is their home in all of those cases, but the owners of the asset pay the tax.

Unless you just don’t like HA tenants. Which is a different conversation.

Why are you angry? I have a job.

Well, now that money needs putting back, hence the taxation we’re talking about.

Join us for paying it, if you like.

I did notice you’ve not mentioned anything about your lack of contribution to the cost of running the country, despite having lots to say about what taxpayers should and shouldn’t pay.

Oh that. I mean they were buying it at rush weren't they in an emergency. Mistakes were bound to happen..

We wasted 9.9 billion just on PPE.

9.9 billion of tax payers money. My taxes, your husbands. The people whose earnings actually contributed to buying unusable and expired PPE.

If you think that doesn’t equate to wasteful government spending, you’re on a different planet.

COVID like .... It was a pandemic

Successive governments making terrible financial choices, spending money irresponsibly (see Covid..) and the huge national debt.

I would assume you knew that.

But if we’d like to focus on taking some of the burden off the broadest shoulders, surely the sensible place to start is by focussing on those who don’t carry any of the tax burden at all. Encourage them to get into work, share the load and start contributing at all.

Welfare first, if we must. But optionally unemployed next IMO.