What are the Tories thinking with insane £1,000,000 inheritance tax threshold proposal for family homes?

[Figmentofmyimagination]

It's almost as if they have completely lost their way.

Labour???

Not sure I follow Bereal7?

I think it's a great idea and hopefully they can raise the limit at some point too.

This is a crazy idea (and I say that even though I would personally benefit).

Property gains need more, not less, taxation. Property value gains are pretty much the only form of income which is untaxed - which is crazy because they are also a completely unearned windfall.

We ought to be taxing unearned windfalls more, and earned income less. If we taxed property gains properly we could reduce other taxes such as income tax (to incentivise working) or sales taxes (to incentivise spending).

That said, I think the best way to tax property gains is not by IHT - as that can easily be avoided. I'd rather see the removal of the PPR exemption from CGT - at least above a certain threshold.

Why don't they allow elderly people to give larger gifts to children within seven years. Why should people not be allowed to give whatever gifts they like within the last seven years of life. The £3000 limit has not been raised in years.

If I died my dc (all at Uni - but this is still home during holidays) would be homeless as they would have to sell the house to pay the tax.

No they wouldn't. If you are staying in the house you can pay in instalments. So once they left uni and got a job, they could get a mortgage and pay the tax. Or they could use other assets (eg selling a car) to pay the tax. The situation isn't as bleak as people paint it.

the problem with anything based on house prices is that they vary so hugely. My parents' house is far from luxurious - in fact I think it is prime material to be bulldozed and a block of flats replace it.yet, Dsis and I would have to go through the hassle of getting probate declared, then having special permission to sell the house first before we paid the tax on it (as we wouldn't have enough cash to pay the tax).

Someone living further north could have parents with a far more amazing house, and inherit the whole thing without paying tax on it.

Dsis and I would have a nice chunk of cash to go towards the mortgage (but it would be nowhere near enough to pay off the mortgage, or even to buy a studio flat).

Someone living in the north would outright have a large, luxury house to sell/live in.

This distorts the perception of 'wealth' and makes whether the tax is 'fair' or not harder to discuss.

"I've worked to earn the money in the first place, and paid income tax
Then I bought a house, and paid stamp duty
Why the hell should my estate then pay out inheritance tax?"

What about if your parents died and left you property that they'd paid 5K for. By the time they pass it on to you it's worth 200K. By the time you die and pass it on to your children it's worth 600K. Who 'earned' the 595K the house has accrued in value since being purchased out of taxed income? You? Your parents?

I can understand people getting miffed about it in view of the fact that the money won't be spent wisely but that's the case for all tax takings.

We definitely do need the government (and local authorities etc) to take a great deal more care of our money. But that's a whole different issue.

btw - the idea of being able to sell a car or get a mortgage to cover the cost of inheritance tax is laughable. A couple of brand new Ferraris would cost less than the amounts needed to pay off inheritance tax. Most young people have almost no chance of getting a mortgage big enough to cover the cost. One of my aunts has 5 adults (children and their partners) living in her house as none of them can afford their own accommodation, yet they would have to pay 40% tax if she dies, leaving them homeless (I don't know how much installments are, but they can't even afford rent, so I assume that they couldn't afford paying tax like that either). The money left after paying tax and selling the house wouldn't be enough for a deposit on a 2 bedroom house.

minipie "I'd rather see the removal of the PPR exemption from CGT - at least above a certain threshold."

Wow, that is controversial, but I like your thinking. An interesting way to tackle the UK's distorted housing market, certainly.

I think also that Tories tend to prey on low levels of understanding. People like my 80 year old mother in law, for example. She has a small house worth no more than £250k but last year she was scammed by a financial services company to put her house in a trust, supposedly to avoid care home fees (ineffective) and iht(unnecessary).

She is a classic Tory/ukip voter who gets all her politics from the daily express. I noticed that this morning DC announced this policy in general terms, as if ALL hardworking homeowners would benefit, not just those with very valuable houses.

Someone like her, living at home, set in her ways, quite tempted by Nigel, would just hear "inheritance tax.. Politics of envy blah blah ...they get my vote" etc, without necessarily realising it doesn't impact on them at all.

yes, the money from an inheritance IS a windfall, but in many areas, the cost of buying a house is so high that the 'good luck' of a windfall is wiped out by the 'bad luck' of how much it costs to live there.

Of course, if you inherit from a property in the SE but live elsewhere, then you're quids in.

Don't forget the purchase price is not the total amount spent on a property. My dad has spent significantly more on mortgage payments (at rates up to 15%) plus ongoing maintenance. Not all of the increase in value of his home is property inflation.

How dare they offer this whilst threatening to slash disability benefits more?

What I mean is : the very rich won't pay this tax because they can afford to give their children their assets before they die. Normal families cannot do this because they need their assets whilst they are alive. Therefore, the rich will not suffer from this, it will be the normal families who are hit. All the while, people will praise Labour thinking they are looking out for normal people.

I do think normal families can have assets worth that much. Houses in the SE/LoLondon have gone up in value but that doesn't mean their salaries match. They are very much normal families all working to pay utilities - difference is their home has gone up in value but this is not disposable money

Hope that was clearer

bereal why are you going on about Labour? This is a Tory policy.