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?

beast of burden but they are already paying inheritance tax on the actual value. Why not just increase IHT (which considers all wealth) if you want to tax inheritance windfalls?

Actually, I am sure I heard somewhere that many of these property owners pay ridiculously low council tax too. (Or maybe they just don't pay at all and la's have trouble prosecuting them) it goes back to the boring day to day job of ensuring the tax laws we have work properly. Not many headlines in that though.

Yes merry indeed, I agree. I am really not sure a mansion tax is at all effective on either group it is aimed at.

Because what they are trying to do is get some income out of a capital asset. And any fule kno that taxes do not work like that. You get income from income and you tax a capital asset at the point of transaction. Stamp duty or IHT, it's all the same mechanism really. As they used to say, charmingly in the exams, "death is not a chargeable event for capital gains tax purposes" so they use IHT instead.

But they want their money sooner. And they are too chicken to close stamp duty loopholes and they can't put up the fee for being non-resident any higher.... so we have this instead.

i dont think it's a well-designed tax and I agree with you it won't work. All I wa saying earlier is that some of the issues around cashflow would be sortable; they are not a specially big deal.

redpipe. You have a fear about money dont you?

Councils have the right to not apply discounts on second homes or empty homes. In fact, there was an idea floated here (Camden) recently about increasing council tax on empty properties, so that international investors who are leaving homes empty, end up paying more. At the moment the council can charge an extra 50% on top of council tax after a property has been empty for 2 years, but want to increase to 100%. But apparently it is difficult for them to legally define what is an empty property.
As merrymouse suggests, you can stick some furniture in the house and visit harrods twice a year, and then it isn't empty.

How much would make you feel comfortable 10mill, 20mill? or are you like Mrs Cherie Blair, who says that because of her poor background, or the way money was handled in her household, I cant remember which, she will never feel comfortable about money, no matter how much she has.

Funnily enough I started on this thread being very definite I was anti the mansion tax. But the more redpipe goes on the more pro I am becoming.

And I do think her pensioner's missing eye is starting to sound more and more like the infamous benefit goat!

sweet
I find your posts insulting, would you mind not being so rude and personal

I find your thread insulting.

Insulting to millions of struggling people actually.

I rarely have a problem with posts about a lot of money, but I do about this one.

I am currently on two threads where people do not have enough money to turn on their heating this winter.

Go turn off your heating [yes, I expect you will say you only have the heating on for 2 weeks a year], or as some are going to do. only have the heating on for 1 hour per day throughout the winter.

Just reading back a few pages. Am intrigued by the idea that all those paying exhorbitant prices for housing in London could relocate and become florists or teachers in the north. I hadn't realised there was so much demand...

beastofburden SDLT loopholes?? Do tell. I thought they had all gone ;-)

I don't think people will be able to avoid this tax by splitting their house into two flats, say. Or at least, if they did, they would come a cropper when they do actually sell as only one would attract prr (main home relief) and the other one would attract Capital Gains Tax.

To me, the mansion tax just smacks of an envy tax. Yes, people who own houses worth over £2m are wealthy so you could take more tax off them for no particular reason (and remember that the wealthy already pay most taxes), but then anyone in the UK is wealthy compared with some people in the world. Surely everyone should pay a proportionate amount, graduated, which is what we have with income taxes and capital taxes (although I can't for the life of me understand why CGT is no longer at the marginal rate of income tax together with taper relief for inflation).

Sorry, TMI like beastofburden

BTW Yes, I do live in a house worth over £2m and yes I would resent paying more tax as we already pay £0.5m tax every year which seems like a reasonable contribution. I suppose we would cut back on what we give to charity. If tax gets much higher we will move abroad, as would many others.

PS Does anyone know if the lib dems would add up the value of all your houses, or just do them one by one?

I believe it's very hard to avoid the stamp duty.

A married couple could break their 2M house into 2 flats and claim to be separated and one living in each "flat". It would be hard to disprove.

voiceofraisin the bottom line is no one really knows how the calculation will work exactly as it hasn't been decided, however as I understand it it would be just be based on your ppr.

However...I suspect they will also have some even more unpleasant tax surprises in for owners if second homes, possibly also buy to let properties (eg abolishing tax relief on mortgage interest payments), regardless of those properties' values. I can understand those (saying this as someone who would be subject to them), they are equitable-the mansion tax simply isn't.

voice I think you can still have your property owned by a company, and then sell the shares in the company rather than the property itself, thus avoiding stamp duty? or have they got that one now- good, if so.

That's gone. Utterly. You pay a shedload if you do it that way. I agree that all loopholes should be closed. If you could get everyone paying a fair amount of tax without complicated avoidance schemes then (fingers crossed) that should be enough.

Personal views aside I think this idea would be a vote winner because the majority of people in the UK would not be affected, plus I'd wager that public reaction on the whole would not be as strongly opposed as it is to other policies such as the bedroom tax. I think that it would be portrayed as us 'all being in this together' because nothing that the current Gov does actually shows this. If I were a politician I would be looking into this policy.

I wonder if there is a correlation between gimmicky policies and tax loop holes?

Voice, good. About time. Lets hope they clear up the others too.

Redpipe, here is another example for you, and one I know very well because I live nearby:
www.zoopla.co.uk/for-sale/details/29090473?search_identifier=990b1c1de2592ac24d56fae71c7ae4d0

This is a little terrace of artists studios in a part of London that was a total no-go area in the 90s. The studios were built for and sold to artists, who lived and worked there quietly, while the area around them was gentrified.
Now, about half are still lived in by artists and the others have been sold on to a mix of couples.

If anyone wants to get an idea of what these places used to be worth, look at the council tax bandings from when they were allocated in the 90s. They were 5 digit values.

And they can't just sell up and move. There is no where in the vicinity that isn't a similar price!

And another!
www.zoopla.co.uk/for-sale/details/30030345?search_identifier=990b1c1de2592ac24d56fae71c7ae4d0

60 years ago, this would have been affordable on one very ordinary salary

Thanks Spare change, great example.

Unfortunately I got really nasty personal replies from Sweetsweep which is putting me off replying.

That last one has clearly been valued on the potential to develop (ie add another floor) rather than it's actual value as a house to live in.

It's sad really. It doesn't represent one person getting a windfall as much as the unaffordability of property in the southeast, which is really due to the concentration of jobs in the area and lack of housing.

merrymouse
You are right, but a house value is a house value.
When the teams of valuers go and fill in their spreadsheets, they will presumably report what somewhere is worth.
And that usually means what someone else is prepared to pay.
And I would bet the formula used to value that house is value of house with extra floor minus the cost of adding the floor = sale price

And that is just one of hundreds of roads of terraced houses in that part of London, where there will still be the odd un-modernised house that is now worth silly money, despite the people living in it having done nothing to it in years.

I think I'm mourning a lost London. You can imagine that house in a Shirley Hughes picture book.

It's all well and good linking us to these homes in London to try and prove how expensive the houses are, and they make that point well. However it misses the crucial point that most people could never afford to live in a house like this, so those that can, should pay more in tax.

In addition, those that have seen their house value appreciate by millions, are in a very fortunate position and could consider that paying a percentage of a huge fortune in tax a much better position than someone who will never be able to afford their own home.