AIBU to think a £2m homeowner should pay mansion tax?

[LadyJos]

Anyone read the Telegraph Article about the 93 year-old man paying mansion tax on his £2m Richmond Home he bought for £15,000? AIBU but isn't £15,000 to £2m a fairly good return over 60 years, and shouldn't he pay some tax at the end? I can't help thinking since the home is mortgage-free, he has options here to pay the £2500 a year...
‘I’m a 91-year-old veteran about to be dragged into mansion tax. This is wrong’
www.telegraph.co.uk/money/property/house-prices/91-year-old-about-dragged-into-mansion-tax/

One important thing to agree on - all assets are taxed on death.

If we can agree on that, then we avoid using it as a reason not to pay tax on singled-out assets in life.

Most gains in asset value (save nuances like ISA wrappers, pensions etc) are taxed proportional to their value. However, property gains are not taxed.

People seem to view gains in property as theirs. A solution to this would be to make it mandatory to sell the house for what it was bought for, plus inflation and plus the mortgage that has been paid off. This bypasses the speculative aspect of the housing market and still entitles people to all the enjoyment and security of a home, without the expectation of an outsize financial reward at the end. That way, you wouldn't have any gains to pay tax on.

t's not about what someone originally paid for the house, it's about the value of the asset they hold today.

I couldn't disagree more.

You don't penalise people because of the way they chose to spend the money already taxed. It's outrageous.

2 people earn the same amount, one goes on a world cruise, the other sacrifices everything to buy a house, and 10 years later, we penalise the one who has a property because he has more assets? All the taxed HAVE been paid already, his income tax, the stamp duty etc.

That's not even communism anymore, it's nonsense.

And the worst thing of all, is that the really rich are not even being taxed! Everything goes into trust etc and they pay nothing. See how much inheritance the Estate of the Duke of Westminster was taxed... Existing tax don't apply for them, before we even start of plonking new tax on current tax payer.

But council tax isn’t a wealth tax, it is to pay for services. Bands are assessed and vary locally to reflect the area.

In this area, house prices are much higher than on average in the UK. This is already reflected in their council tax bands locally.

So now this additional tax is… just a tax on the price of your property, penalising people in the south east and London where property prices are particularly high.

People in the south east and London already spend proportionally more of their income on housing. I don’t think additional taxes on this group are justified(and I include the LVT proposals at 0.48% of value).

I recognise the issue that there’s a load of property wealth held by older people, but I don’t think this is the way to address it. I’m younger adult and it pits me off aspiring to acquire a property of this value if I’m saddled with yet more charges for doing so - I don’t think the government should be encouraging its tax-generators to aim lower.

I mentioned the PAYE in reference to the idea that higher earners are just being hammered from all angles by the tax system.

I don't like the mansion tax because it strikes at the core of home ownership and stability. Yes, it's easy to accept this when it's people that we see as wealthy but inevitably the scope creeps down and suddenly anyone with a nice house in a decent area will be taxed more. The problem is that most of us bought our houses before these taxes were on the horizon and perhaps would have made different choices if we knew about them. Moving is hugely expensive and disruptive before people suggest this and ultimately is this what we really want? Loads of people that have bought what they thought was a forever home being forced to move due to a weird punitive tax? Why does owning a £2 million mean that you should automatically pay more tax than someone sat on another asset worth £2 million?

Plus let's add that the one who invested in their home is less likely to be dependent on the state in the future than the one who pissed it away on cruises and expensive cars.

One important thing to agree on - all assets are taxed on death

I think the principle is that disgusting as it is, tax HAVE already been paid on the properties and funds, but let's tax them again.

Even so, assets are not taxed on death for the super rich. Trusts etc are exactly there to avoid that.

Someone whose house gained a bit of value will be taxed AGAIN so his kids can't afford to keep the house. Royal Family, Duke of Westminter etc.. where did you see they are taxed on death?

really how much do you think that hosue would be in Oxford? In Bournemouth? In Birmingham? York? Bristol?

Because people pay tax on other assets.

It would be great if the government could get everything they needed for excellent education, healthcare and infrastructure from the Musks and Bezos of the world, but apparently they can't.

So getting wealthy property owners to pay a miniscule amount (2.5k is 0.125% of 2 million) seems like a sensible plan.

Or do you think those that are already working full time, living in shitty rented accommodation and struggling with the cost of living should pay more?

May I take your illustrative story and put numbers on it...

Two people both have £15,000. One spends it on a cruise. The other spends it on a house.

Sixty year's later, the one who spent it on the cruise remains without that original £15,000. The one who spent it on the house sees an appreciation in value to £2m.

They have made a capital gain. Because it's a property rather than any other kind of appreciating asset, they do not even need to pay capital gains tax. It was an extraordinarily good financial decision to buy a house and not go on a cruise.

In 2026, mansion tax comes along. if he lives another ten years, the total he will pay is £25,000. So he still gets to keep and benefit from £1.960m of the appreciation in value of his wise decision of sixty years hence.

It irks me because we’ve just bought ours, paying for it with already higher rate taxed income, plus a mortgage and we paid a fuck ton of stamp duty, again, from already higher rate taxed income. So, will that stamp duty be taken into account? And what about the mortgage?

I don't think it's "penalising" people for buying a home. We tax different forms of wealth differently throughout the tax system. Someone who spends their money on shares pays capital gains tax when they realise those gains. Someone who inherits wealth may pay inheritance tax. Property isn't uniquely exempt from the idea that accumulated wealth can be taxed.

I do agree the super-rich should pay more and that trusts should be tackled first. But I don't think "the Duke of Westminster avoids tax" is a reason why nobody else with multi-million-pound assets should ever contribute more. That's an argument for closing loopholes, not abandoning wealth taxation altogether.

OK, let’s tweak your analogy.
Instead of spending £15k on a cruise, they bought a painting which is now worth £2million. It hangs in the hall of their council flat…

🤷‍♀️

Eventually this tax will be on every private home. Even a shitty terrace in Wigan. See how fair everyone thinks it is then. This is a slippery slope.

'All property is theft' and all that.

What other tax do you pay on simply owning an asset?

I think that this mansion tax will end up costing the state almost as much to implement as it produces so it's a complete red herring in terms of raising serious money and yet it will threaten the whole premise of home ownership in this country and the physical and mental security this provides its citizens. It reminds me of the private school tax. All pointless and time consuming when actually the real gains can only be made when the masses pay more. Yes, it's crap but that's where the multipliers are that allow us to raise meaningful amounts of money which is obviously what we need.

Unless of course we get serious about growth. Look at Ireland and it's latest growth figures and budget surpluses. We can't tax our way out of poor growth.

You clearly don’t understand mortgages, interest or the concept of time value of money

stop taxing fucking everything and cut benefits, public sector spending and waste and fucking illegal aid straight into hands of Islamist terrorists!

Ok, I'm game for this tweak.

So they buy a painting for £15,000. It hangs in their council flat. It is now worth £2m.

That painting, when sold, will be subject to CGT of £475,680.

The asset itself will then be subject to IHT upon death.

In contrast, there is no CGT on the house - only a proposed mansion tax of £2500-7500 a year.

Then the asset itself, like the painting, is also subject to IHT upon death.

Taxwise, I'd definitely rather have the house than the painting.

It's baffling how home owners are claiming to be penalised when they are in such a protected category!

I think it's more ideological than simply a desire for more money. We're dealing with Fabians here don't forget. They have long term ideological goals.

I like your choice of language.
You could equally have said, "one sacrificed it all to go on a once in a lifetime cruise. The other splurged it all on a house, with no money left to enjoy life"
Then, double whammy, the house owner was taxed on his investment 😉

The idea is just to generate more money for vital public services - investment in education and health benefits us all as a society.

We just need to look at the US to see what happens when these critical services are neglected.

You know he's not being taxed on the £15,000? He's being taxed because it's now reached £2m? Plenty of money there to enjoy life (not to mention a few cruises!)

This needs to be pinned somewhere because it really sums it up.
Always the ones least to contribute , have their greedy paws out.

If that was the game then this absolutely isn't the first tax you would implement is it? It's time consuming, costly and raises virtually nothing in the grand scheme of things. Of course it's ideological. It's throwing a bone to people like you who want to see the rich taxed more. It's completely ideological.

Of course it is 🙄

As a pp pointed out, a £2m house in Richmond isn’t a mansion. It is a 4-5 bed terrace or semi that wouldn’t be anything very special in most of the U.K.

A bigger, somewhat special house in Richmond would be more like £4-5m or more.

Still worth £2m though :-)