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/

He will be paying an awful lot in IHT when he dies. Isn't this enough?

Why shouldn't the premise be that most of us pay for our own public services and NHS? Why do we have to pretend it must always be someone else? There aren't enough of these other, richer people. This piddly tax isn't even going to scratch the surface.

But it's not necessarily. Why is a £2M house with £500k deposit and a £1.5M mortgage more wealth than a £500k house owned outright?

But that's based on actual value. The house isn't owned outright, so why is the full value taxed rather than the actual amount owned?

Net wealth of 500k is the same in both cases.

2M house has greater potential for appreciation. This wealth can also be leveraged.

🙄

Yes, and why is someone in this position and no pension wealthier than someone with a house worth £300k but a pension pot worth £800k?

People only own the equity in a property. Property isn't the biggest source of private wealth in the UK by some calculations. It's pensions. Do you think people should start to pay an annual tax on their pension pots if they are deemed to be a lot more valuable than the average? Why don't we start looking at other assets too? Cars? Jewellery?

I don’t have a mansion (!) but I have just paid off my mortgage (well, I am old). Approaching retirement, most people like to breathe a sigh of relief and think that at least they’re secure in their home. Some can splurge, others have to live modestly but they have the roof over their head (me).

All these threatened taxes - property tax, land value tax - are thoroughly putting the wind up me.

The person with the large mortgage will have far more outgoings than the person that owns their property outright. They will be highly leveraged themselves let alone trying to leverage wealth from this property. They will be paying a lot more interest which could easily negate any property value growth, especially at the moment. It's a real twist of logic to suggest they are significantly more wealthy than the person that owns their property outright. How then is this a wealth tax?

This is getting very desperate reasoning indeed

And for depreciation . Or do we now tax based on assumed future value? If my £2M house with a whopping mortgage is devalued cos they bulld
a sewage plant next door, and i end up in negative equity, do I get a rebate?

A person doesn't get a 1.5 million mortgage without being able to assure the bank of an income that enables that.

If they later can't afford it, they'll have to do what everyone in that situation has to so - sell the house. I've done it, many people I know have done it. It's just a house.

Other things are way more important - relationships, family, health.

If the person has a large income then they will be getting taxed already on that. I thought we were talking about wealth and not income? If so, then you can't argue that someone with a house paid off worth £500k is less wealthy than someone who has £500k equity in a £2 million property.

So logic would suggest that they can both pay the same amount of 'mansion' tax if it's a wealth tax? They both can sell their respective houses if they can't afford them. Like you say, the person who thought they were home and dry with the £500k house won't mind selling up as lots of people have done it and there are more important things in life.

I’d be very surprised if this man exists. The Telegraph has form for inventing this kind of story to wind up its readership.

Everyone is taxed on their income! The assumption is, someone buying a 2M property has a higher income than the one owning a 500k one and can afford the associated costs. If they don't have a high enough income to accommodate a frankly, very small tax of 0.125% on their property - then what on earth are they doing buying something so out of their reach?

But we are redistributing, massively. Do more and no one will bother making the sacrifices needed to be a high earner, as it won’t be worth it.

“The richest fifth of people's mean equivalised household income before taxes and benefits (£116,600) was 12.2 times larger than the poorest fifth (£9,600); however, this gap reduced to 3.3 times larger (£85,100 and £25,700, respectively) after all taxes and benefits.“

I’m pretty pro-redistribution and a life-long labour voter, but I was shocked by this.

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/2024

In a marriage whatever is there is owned by both jointly. We haven't left yet first there's the war and even though things are better now with DH returning their for business we've have DC still needing our support in the UK. But damn one day we'll say bye bye.

Oh come on! We all know that the very wealthy dont have income from working, it's all from appreciation of assets etc.

They will be paying £400000 in inheritance tax when they die.... That is quite a lot of tax

And if you go to Dubai and live there (once you've finished benefitting from the safety and rule of law of the UK) and if your husband invokes the Taluq (instant divorce), what will you do? you won't get half his assets...

Investments which are always liable to risk? Try getting mega rich of risk free government bonds

This actually isn't how the UAE is anymore and I'm not Muslim...

Of course. The house ‘contributes’ to society. The owner doesn’t need housing support.

They don’t sell because they can’t afford it due to tax! A governmental choice!

Well, on the bright side the UAE has probably fewer influencers, plastic surgeons and d-list celebs around now due to the war.

Just more money launderers, arms traffickers and organised crime syndicates.

Lovely.

Wrong. £15k then is only worth £250k now if you're just measuring consumer price inflation, which doesn't account for the cost of housing. Unfortunately the CPIH index doesn't go back beyond the 1980s.

The average house in 1968 was worth £4k. So his house was nigh-on four times the average.

Ah yes, the war. Where a bunch of tax exiles depended upon the British taxpayer to evacuate them.

Maybe we should start taxing based on citizenship like the US does. If you want to be a tax exile, you can renounce your citizenship - but don't expect consular assistance.

You are getting tied up in your strange logic.

Either the Mansion Tax is a wealth tax or an income tax.

It obviously isn't an income tax because it levies tax on people regardless of earnings. Those earning a lot are already being taxed progressively through our Income Tax regime which already taxes high earners a lot compared to other countries.

It isn't a wealth tax as someone with significantly less wealth than £2 million can be subject to the tax whilst someone with more than £2 million held through a pension, investments or any other asset will avoid it.

If a annual charge of 0.125% is so easy to absorb the lets apply it to all home owners. We can use the same deferment rules etc. So that would mean that the person owning the £500K home has to find £625 a year. I imagine most people could but what about those that can't? What about those with huge outgoings and already struggling?