To think if you own a £2 million house you are rich?

[lesley33]

I guess I am just surprised at those who think you can own a £2 million house and not be rich. Only 0.5% of sales in 2010/11 were for houses worth £2 million or more. Link below. So if you own a house worth this you are in a small minority of the population.

Yes I know its possible to be asset rich and cash poor (although you could always sell your house?) But AIBU to think anyone who has a house that is worth £2 million or more in the UK is rich?

www.propertywire.com/news/europe/uk-property-tax-prime-201202236204.html

Slightly off topic but if you inherit a house over the inheritence tax threshold do you have to pay the tax in one go straight away?

I don't get the OP.

Having £2 million pounds, make you rich?

Yes I suppose it does?

What of it.

Having a £2million pound house (on a mortgage) does not automatically make you rich.

But I suppose people's definition of rich varies.

If you had only 20% deposit on said house, then you would have £400k equity.

Does owning £400k make you rich?

YANBU. And in spite of the argument that people might find themselves in expensive houses almost by mistake and be unable to sell them, several posters on that thread insisted £2m didn't buy all that much, which is clearly utter bullshit.

Whatmeworry. No. Closing the stamp duty loop hole and the Mansion tax are entirely separate beasts.

SDLT loophole closing - Yes, this is going to happen

Mansion Tax - This is not going to happen.

@bronze... yes. IHT is deducted from the estate before it is distributed. If that means property has to be sold to generate the funds, that's what happens.

bronze yes it is paid out of the estate before you get any of it.

Jinsei it's kind of a moot point now, but if you were spending all you were earning, you wouldn't have any money left for this additional mansion tax.

And if you sold it and downsized, then you may well not be eligible to pay it anyway.

They should close the SDLT loophole without a doubt.

They shouldn't introduce a mansion tax.

That's my view.

"if you are paying 10k a month on your mortgage then you are no richer really than someone with a modest £1,500 a month income paying £500 on their mortgage."

Do you really believe that???

So someone with an income of £1,500 a month is noe better off than someone with an income of more than £10k a month. Yes they may have the same amount of disposable cash once bills are paid, but of course one is better of. People make choices about how tro spend their money.

Lesley - there are different types of 'rich' you might be 'asset rich' if you own a house that's 'worth' £2m (although if it's not for sale, you don't really know what it's worth if you don't know what anyone will actually pay for it), that doesn't mean you are 'cash rich' and have a great deal of money.

Our house has apparently increased in value by £100k compared to when we bought it. I don't have £100k, I would have to sell, hoping i got that (paying estate agent fees etc) and go live somewhere smaller (which will also have increased in value in that time) to get that money. We intend to stay here for another 15 years, in that time, house prices might crash, they might stay as they are but inflation reduce the 'real value' of that £100k, they might go up further, but until that time, it's sort of pointless to talk about my 'profit' from the house, I need to live somewhere so I can't access that money. It's purely 'paper riches' not actual riches.

This is rather different to art, shares, jewellery etc, you don't need to have these things, houses are different, they aren't just assets, they are homes, if you sell your home, you need to get another one, you can't live nowhere. You can't just sell and use the money for other things (like you could with any other asset), you will need somewhere to sleep. (Granted, it could be somewhere smaller/cheaper.)

Quite DamnBamboo - obviously, 11k a month would be a HUGE amount of income to have. However, if you are paying 10k a month on your mortgage then you are no richer really than someone with a modest £1,500 a month income paying £500 on their mortgage.

I'm sorry but that's nonsense. You might not have more disposable income, but you are certainly much richer!

So, someone who buys a house for £2m, does so out of income which is taxed at 50%, and then pays stamp duty. So, they pay tax of £2.1m before getting the house. Let me just say that again.... tax of £2.1m That's a fairly sizeable contribution to the public purse, especially given most of the people in that income bracket don't use any many public services. Plus they will pay the highest bracket of council tax, and probably be levied at least twice on their one property if there is an annexe.

Damn: but to get the mortgage you would need to be able to have the means to pay it. If you had 400k equity then you would be paying around 8k a month mortgage repayments. If you can afford that then yes, you are rich.

Handmade- so if you only inherit a house you will lose it because they will sell it for you?

Lesley, I think you are being too simplistic. Wealth is relative. It's a simple calculation. House values are different. Like I say Income - Outgoings = Wealth.

Yes, but given that most people that thought this thread was about the Manion Tax, which OP, has clarified it's not, the statement you've highlighted Jinsei isn't actually nonsense.

This is a pretty pointless thread.
I didn't that you wouldn't be rich, but what has the value of the house you own got to do with anything in terms of how much money you have left over after all your bills are paid.

You may not have anything left over.

Jinsei, it's kind of a moot point now, but if you were spending all you were earning, you wouldn't have any money left for this additional mansion tax.

But I am not talking about the mansion tax, I have already said above that I don't think it's really workable. I am merely saying that having less disposable income doesn't necessarily mean that you're not wealthy.

I didn't say

I know that this is not about the mansion tax.

You dont have to be weathy to own a millon pound house. After all Nicky Blair, Euan Blair and Kathryn Blair all live in homes worth over a million each bought by mummy and daddy for them.
The Blair family between them own 9 homes. Hows that for the working class can kiss my arse, I got the formans job at last.

It's absolute nonsense, damn. DH and I chose a smaller house with a smaller mortgage because we wanted more disposable income. That doesn't make us more or less wealthy, we are just choosing to spend our money differently.

If you have a mortgage on a £2m house either:

a) you have a massive salary to support it OR
b) the mortgage is small and you have loads of equity

I live in NW London zone 3 nice suburb but not really posh. £2m buys you a good sized (5 bedroom detached) family home on nice road.

If you don't have a mortgage then either
a) you bought when prices were low so have a huge untaxed gain
b) inherited either the property or money - could downsize?
c) bought it when it was already expensive for cash = you are rich

So I agree YANBU.

bronze yes, that's right. The purpose of IHT originally was to break up the large estates, which it has, in the main, successfully done. The royal family is exempt from IHT which is how they can afford to own all those castles palaces and estates.

"So, someone who buys a house for £2m, does so out of income which is taxed at 50%, and then pays stamp duty. So, they pay tax of £2.1m before getting the house. Let me just say that again.... tax of £2.1m "

No totally wrong - only the bit above £150k is taxed at 50% and even then that's fairly recent. Most people buying in cash for £2m are doing with the sale proceeds of previous house - ie untaxed income from riding up the property ladder.