to think the idea of a mansion tax just penalises London and the south

[Redpipe]

I will probably get flamed for saying this but I don't believe that owning a 2 million pound house automatically makes you rich. Certainly in London a 2 million will not buy you a mansion, more like a terraced family home.

AIBU to think that the idea just penalises people in the south?

And I say that as someone who has just had to pay 3% stamp duty, and will be paying inheritance tax when my parents pass away. I think I'm very lucky (and yes I work hard yadda yadda).

Onlytheonce - I'm aiming to buy in what is considered one of the dodgier parts of a London which at least reduces my commute to just under an hour, a place that large numbers of people on here would apparently not want to live in for love nor money as life is evidently so much better once you get out of the SouthEast.

I receive a higher salary to work in London which immediately gets eaten up by the cost of housing and commuting, but fuck it, it's home to me.

Perhaps we can tax the fuckers living in their cheap housing within easy reach of the rolling hills and verdant fields of Northern England as apparently they are all living a much lovelier life than I am down here (it's just that I'm expected to pay through the nose for it!).

And breathe.

Question for all the proponents of the mansion tax-

What if the Central London housing association buildings are forced to pay the mansion tax because of their huge value - and pass this along to their residents?

(Inevitably, landlords will pass this on to their tenants - is there some kind of exemption? Do we know?)

You could say that any tax is a cash cow. People seem to get into an idea that is themselves against the government, with the government trying to rob them of as much as they can, whereas I view it as a balance sheet. It is reasonable to consider both sides of the balance and argue for or against certain positions, but it does need balancing at the end of the day.

I think that £2m is an expensive house, even in London. However, I think it would be difficult to administer because

1. if you have an expensive house you have the means to challenge your tax bill.
2. who values the house? Until the house is sold, any value is notional.

Taxes are designed to raise money or change behaviour. It's not really clear whether it would do the first or what the aim of the second would be.

Onlytheonce - I think there is a big difference between a tax on economic activity, the exchange of goods, and a tax imposed on someone for merely continuing to own a thing. A 2000 square foot house in Primrose hill and a 2000 square foot house on Arran are both just houses putting a roof over people's heads. Tax them when they are sold if you have to, tax people for the local services they receive by all means, but taxing someone for owning one of them just because one is potentially more valuable than the other even though it currently does exactly the same thing - they can fuck right off.

mumoftwo
"I don't necessarily think that he would be happier with more money and I don't think he should be spending millions. But what he could do - and what would improve his quality of life - is each year take £5k out of the half a million I have suggested he withdraws from the house. That's about £400 a month."

You just can't accept he doesn't want any more money can you? He is happy the way he is he doesn't want any more cash each month....seriously!!!!

Also drawing down £500K with compound interest which is currently around 5% and could increase would very quickly run away!

Debt Interest
500000 25000
526250 26250
551250 27562
578812 28940
607752 30387

Total Interest in 5 years 138K on top of paying the mansion tax itself. Fair I don't think so but you do obviously

It would compound even further each further year.

mumoftwo
"I don't necessarily think that he would be happier with more money and I don't think he should be spending millions. But what he could do - and what would improve his quality of life - is each year take £5k out of the half a million I have suggested he withdraws from the house. That's about £400 a month."

You just can't accept he doesn't want any more money can you? He is happy the way he is he doesn't want any more cash each month....seriously!!!!

Also drawing down £500K with compound interest which is currently around 5% and could increase would very quickly run away!

Debt year 1-5 increase

500000

526250
551250
578812
607750

Interest each year increase with compound interest year 1-5
25000
26250
27562
28940
30387

Total Interest in 5 years 138K on top of paying the mansion tax itself. Fair I don't think so but you do obviously hmm

It would compound even further each further year.

Bluegrass, if you look at what I've posted I haven't said I support the mansion tax. I don't have a problem with something being taxed for its value, but I'm not sure that the mansion tax will achieve anything other than pissing people off. If it helped calm the London housing market down, or got money out of foreign investors who don't pay much tax in this country then it seems reasonable. But the revenues generated appear to be tiny, and it hasn't been shown that it will calm the market.

There is already capital gains tax on second homes - maybe there could be CGT on primary residences over a certain value? I don't know whether this is a good idea, but it makes more sense than taxing somebody on a notional value.

Fair enough onlyonce but there's a philosophical difference between a tax on income and a tax on ownership. You're commingling the two in your above post.

I think we just differ on our stance on that then.

fairphyllis you say that the mansion tax is only like tax on savings account interest. In fact a mansion tax is more like taxing the principal sum of the savings account (even if it is paying no interest at all). That's the problem.

If the mansion tax did ever come to pass, I also fail to see why it should be limited to homes over £2m. The tax would be a graduated one anyway if it were, say, 1%. The cheaper the property, the less the tax. Of course, it would be nowhere near so popular because more than 0.5% of the population would have to pay it. It would also still be unfair on those in the SE.

VoiceofRaisin
"In fact a mansion tax is more like taxing the principal sum of the savings account (even if it is paying no interest at all). That's the problem."

True!

in fact a mansion tax is more like taxing the principal sum of the savings account

Except atleast with money in a bank account you would know how much it was worth from day to day. As has already been said, until it is sold the only value a house has is it's use as a building.

I foresee a glut of 2M houses being converted to two "flats" and a "house to flat conversion" cottage industry springing to life overnight.

They've already done that across West London at least.
My DSis rented a basement flat a few years ago (over £1k p/m) with one window and no bin collection.

Redpipe But he wouldn't be spending all of the money at once so the money held in the bank would also earn interest reducing the difference. Plus his house would continue to go up in value.

If he really doesn't want any more money then that is great. I just wasn't sure if he knew that the option was available and in your original description of him he sounded like he might be struggling. Sadly some of the elderly who die due to fuel poverty each winter do so in very expensive houses. However, if posh biscuits wouldn't make his life nicer then that is great.

My own grandmother used money to enable her to stay in her own home until she died aged 96. Nothing fancy - someone to do the hoovering and mow the lawn, putting a downstairs loo in, a taxi to church every week and (after she fell and because she felt the beeper was undignified) someone to pop in every morning, tidy up the breakfast things and check she was ok. Boring stuff but it kept her out of a nursing home which was her wish.

Actually overall I would describe myself as against the mansion tax. I just felt your whole "poor pensioner" argument was a bit silly. There are other much more sensible points that have been made against it.

My view is that it is a silly gimmick come up with by the Lib Dems to try and make all the (generally left wing) people who voted for them last election and now think they are just an extension of the Tory party think that they are "men of the people" after all. It's impractical and is never going to be voted in by (millionaire) Dave and all his rich pals. They would have to pay it!

Well atleast they got through that completely I controversial supported by the daily mail 5p bag thing. Go libdems!

Uncontroversial not I controversial.

InMySpareTime, I meant more something like this:

1. Find out the meaning of a "flat", per building control;
2. Divide houses into 2 flats; implement changes to pass building control; building control leaves & house is put back (or not? maybe some clever architect designs a "kitchen" that can fit in a closet?).

Job done - you now own 2 x 1M properties.

If the tax is levied on the entire house vs the value exceeding 2M (we have some differing info here) - this more than pays for itself. The only way for the government to prevent this is by way of putting very unsavory (fascist?) controls in place.

I think the example pensioner in a very expensive London house could be allowed to defer his mansion tax payment until death or sale of the house. When his house is sold or inherited it will be worth more than that of a similar pensioner in another part of the UK, so he/his family will hardly be out of pocket- they will just a little bit of what has been the most massive windfall.

Crowler- I would guess they would exempt charities generally from this. Charities dont generally pay any kind of taxes.

merry

It's just so depressing though. They had nearly a century to sit quietly on the backbenches and come up with what they would do if they ever got the teensiest bit of power. And then they did. And look what we got!

"I just felt your whole "poor pensioner" argument was a bit silly."

I would say the idea that someone should equity release and lose huge sums of money to the bank in interest in order to fund a tax was silly too.

We'll have think each others arguments silly then.