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

"There are situations where people who do own £2m houses don't neccesarily have the income to match"

But in many cases, people could sell the house if they really needed money, whereas others with a similar income and small house definitely don't have this option. No, selling houses isn't always easy, and there could even be some loss if there's negative equity involved. But at least it may be a possibility for some, whereas those in a small house definitely won't have this to fall back on.

Shoes arguments are silly. Anyone with a credit card balance IS in negative equity on their shoes. If you borrow £200 for a pair of shoes, and walk out of the shop in them, selling them an hour later will only get you about £90 - or maybe less.

spent yesterday arguing about this with my conservative banker borther!!

yanbu

BUT, think fairest way is (a) council tax and (b) income tax

Worriesdbetty - it's not that wealthy people think poorer people are too stupid to understand their wealth, they are just heartily sick and tired of poorer people trying to take it off them.

Why should people with more money/ assets etc just hand it over to poorer people? If you look globally we are all extremely wealthy. Perhaps we should tax all benefits and income at 50% and increase overseas aid. I imagine the "poorer people" as betty puts it would be the first to say they can't afford it? We all look at things from a position of self interest. People receiving money from the government whing when that money is reduced, people paying in to the government whinge when that money is increased. The difference is one set of people feel that it is their own money thay are talking about.

You haven't made any money until the property is sold. Then you need to give up the family home and find somewhere else for you and your family to live. Move a family that has established schools, jobs, friends & neighbours.

The choices aren't easier than they are for people who live in homes worth a few hundred thousand and have to move due to change in circumstances.

Funny how wealthy people whinge about having money taken off them, but are quite happy to take full advantage of all the shared resources in the country - OK for them to take money off the majority, but not for the majority to take money off them?

All you are doing is explaining the same deluded psychology.

I'd think that people who live in 2million £ houses and can't afford it, are not poor, but stupid. Particularly if they mortgaged themselves silly at the heights of the housing market.

I'm not a financial genius but could see when the market was close to a peak (it was all over the newspapers) and made sure we had good equity when we bought our house and that the mortgage payments wouldn't ruin us.

My 100 year old grandmother had to leave her house because she could not live alone there.
I'm sure that any 100 year old person can move house if she can't afford to live there.

And if you inherit it, either sell it, rent it or invest in it as a business.

re choices - they ARE easier if you have more money because those choices are less threatening. If you take the money out of the equation, the comment could just as easily be 'its no harder for wealthy people to make their assets liquid'

In fact though, moving from a wealthy area to a high middle class area means no change in crime stats, safety, education opportunities etc. Someone moving from a £120,000 property to a £50K property would be moving to an area with higher crime, lower standard of living poorer services etc and also because of this would be more trapped and marginalised. You can't ignore associated structural factors.

YANBU

And whoever says wealth = income - outgoings is completely wrong. They're missing the assets - liabilities component of that.

I think in most cases you would have to be relatively well off.

The mansion tax proposal though is an awful,unworkable idea that has calamity written all over it.

I know - its like 'I have a million pounds in the bank, but its in the bank, so I'm poor, lend me a fiver' bloody rich people...

worried - which are these shared resources that the rich are benefitting from that the poor don't?

YANBU.

There's alway mitigating circumstances though, like those who've inherited mansions and aren't allowed to sell. They can be skint and still be the owners.

Anyway, all you need to do is start a company with your wife, have the company buy 60% of the property, pay rent to the company and woo hoo, you are poor again! Stop the daily paper!

Its not always possible to invest in inherited property. Where's the money going to come from to invest? Especially if the property in crumbling and requires x£££ for upkeep alone.

I have no issue with rich people, or asset rich cash poor people. I do have an issue with the tax haven we've become for non UK resident property owners.

the problem is that as you get older you realise that wealth is not correlated with ability, application or contribution.

WorriedBetty, I was thinking more along the lines of decisions such as moving so you have a longer commute to work or having to change jobs, changing schools and moving children away from their friends aren't any easier no matter how much money you have or how much your property is worth.

I think people are grossly misinformed about this notion that seemingly anyone who pays higher rate tax has an accountant to ensure they don't actually have to pay that tax.

As a general principle, if you are working for an employer and are on PAYE so bringing in an actual salary at the end of every month then you pay income tax on that salary, regardless of whether you earn £200 a month or £10000. If you earn a cash bonus that cash bonus is subject to the same rules as your taxable salary.

It becomes more complicated if you are paid in shares, but even then shares are not a guarantee of an income, as, as we know, share prices are fluid and whereas you might be given £1m worth of shares today, if the price crashes they might be worth a pittence tomorrow.

And if you're self employed there are lots of tax loopholes, but those apply equally to small businesses as to multi millionaires, and I certainly know several self employed people who wouldn't ordinarily be higher rate taxpayers anyway, but who pay as little as 10% in income tax because the law allows it.

I think there needs to be less bashing of the tiny minority, and more realization that non payment of tax is a lot closer to home among the self employed than those who dare to be successful and earn a good salary.

yes they are! If you are in an area where you have a house in the top 10% in the area, there are cheaper houses in the same area. If you sell a £500,000 house, the number of houses with similar commute, same schools etc is much greater than someone selling a £120,000 house. Stop being so deliberately dumb.

For example, if I move, I can't buy a house with a lower mortgage, and rents for properties with one bedroom are more than my existing mortgage payment. If I had £500,000 property, with £300,000 equity, I could buy about 60% of the properties in the area.

I thought we were talking about £2m+ houses?

These tend to be in pockets around London. Cheaper properties in those areas would be flats rather than houses(£500k+ for 2/3 bed flats). The other option would be to move out of the area and that would have an impact on many aspects of lifestyle.

I'm thinking of places such as Kensington, Notting Hill, Maida Vale etc.

You haven't made any money until the property is sold. Then you need to give up the family home and find somewhere else for you and your family to live. Move a family that has established schools, jobs, friends & neighbours.

People expect that all the time of poorer people.

You have a £2mn house, you're asset rich. Sell it, you're cash rich.

Tax on assets has to act differently to tax on income though as some people won't be able to pay.

I think stamp duty is a bit lame really as is council tax - both need adjusting to reflect current prices (eg the bands council tax havent gone up in line with property prices which is daft and stamp duty leaps up as you go up when it should be applied more gradually like income tax).

It all depends on what you consider rich to be, some people might think rich is being able to pay the bills and have a bit left over for nice things like holidays. Others might not think of themselves as rich until they drive a Bentley, own a Yacht and have a holiday home in the South of France.

IMO,People that live in expensive houses are obviously hardworking, educated individuals. Our economy needs more people like this, as I assume a lot of people living in big houses own their own businesses and employ people to work for them.

a good test is to see if the 'poor' people with houses over 2 million would swap with middle earners

^WorriedBetty Mon 19-Mar-12 10:04:15
Anyway, all you need to do is start a company with your wife, have the company buy 60% of the property, pay rent to the company and woo hoo, you are poor again! Stop the daily paper!^

that is only true if you are non dom. the vast majority of high earners cannot do that. what they do do is a pay a high rate of stamp duty.