Rachel Reeves considering charging CGT on sale of main residence?

[Another76543]

It’s being reported today that Reeves’ latest idea is to tax homeowners on the capital gain made on the sale of their homes, where that home is above a certain value. From The Independent

“Rachel Reeves is considering hitting the owners of high-value properties with capital gains tax when they sell their homes as part of an attempt to fill a £40bn hole in the public purse.
The chancellor is said to be looking at ending the current exemption from capital gains tax for primary residences as she seeks ways to raise cash in the face of dire warnings about the state of the public finances - a move that would be seen as a "mansion tax".
Such a move would see higher-rate taxpayers pay 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy.

Sources told The Times that under proposals being considered for the autumn budget, the private residence relief would end for properties above a certain threshold.
The threshold is said to still be under consideration…….. “

So would you have people who have paid stamp duty when they bought the house, then being charged twice by having to pay CGT when they sell? And if you have a mortgage of 90% on a £1.5m house, do you pay on the equity you own in it rather than on the sale of the house?

All smacks of lefty 'bash the rich' rather than considered economic policy.

Come on do you really think a majority of Labour voters in these areas have properties of this kind? Some will, including the PM, but not anything like a majority.

The potential policy that stings this group more is 500k property tax proposals imo

The biggest I think will actually make a difference to the bottom line is a penny on income tax (whilst raising thresholds so it doesn't hurt lower earners so much).

Cutting the welfare bill would also help but doesn't seem to be achievable.

But the better option of all would be get the economy booming so there was a bigger tax take all round because of bigger earnings and profits.

So another tax only people in London and the South East will pay. Marvellous. Talk about discrimination.

Absolutely right - she’d get a lot more respect if she just cane out and said “look guys, I know we said we wouldn’t raise xyz taxes but this is the situation we are in so we’ve got to collectively rip the plaster off and raise income tax/VAT/inheritance tax (or whatever) - shirt term pain for long term gain”. Instead she’s tinkering at the edges, made employing people more expensive and Non-Doms leaving the country. Brilliant!!

Be taxing us to breathe next at this rate.

And those elderly that have to sell to fund their care will be losing a vital amount of those funds.

We already do badly, paying for prescriptions, Uni fees, no bus pass until SPA (outside London) and many more.

£1.75m house bought for £250k 40 years ago - tax due under this proposal for a higher rate taxpayer - £360,000. Tax due for a lower rate tax payer - £270,000.
IHT due if it isn't sold before death (assuming full allowances and left to children) - £200,000.

This isn't going to encourage people to sell up early!

There’s a lot of sense in that except Labour have not been able to reform welfare and they have excluded increasing income tax. I don’t see she is suddenly going to look at income tax. The system of payment is broken for income tax. You have a tiny minority paying actual tax. She is going for accumulated wealth given how she has boxed herself in.

Of course a majority of Labour voters do not live in houses worth over £1.5m, but there are an awful lot of pretty normal houses in London (zones 1-3) that cost more than £1.5m, and a high proportion of them would be occupied by Labour voters, going by the voting patterns for the more central London boroughs.

Will they deduct the cost of mortgaging, the costs of buying, costs in property upkeep, improvements etc. A landlord can deduct some of these from profits when selling a second home. I've "made" £500k on my home over 30 years, but deduct expenses and inflation, and there's not much profit to charge cgt on.

Yep this!

Carry on.

And what about home improvements? Buy a crumbling wreck house for £1m. Invest £1m doing it up and improving it (and paying VAT on those improvements) - sell it for £2m and get hammered?

Well… do you think Reeves would have much incentive to agree to that if she wants money? I would think not

@Chewbecca whereas in Scotland we get prescriptions and uni free but as a higher rate tax earning couple, we are £7k worse off than we would be in England p/a.

I don’t see why you wouldn’t be able to deduct whatever costs you can currently deduct when calculating CGT on a second home. So your annual allowance, selling costs, costs of improvements. Not property maintenance though.

No, those can be deducted under the current CGT rules for properties that aren’t your main home. I doubt they’d change any of those rules, just remove the main residence exemption for high value properties.

My point is that the accumulation of wealth can be “accidental” in some respects. We bought our first marital home in the late 90’s, by the time we sold it in mid Noughties it had tripled in value. We benefitted only because we happened to be alive during that period. No commensurate change in disposable income during the same period!

That will apply to many people. But if you look at who Reeves wants to tax then she has been pretty clear that excludes taxes on working people (whatever that means) so has been explicit about not income tax. That really does only leave asset based taxes which was the flip side of the manifesto she wrote. So she’s not going to touch income. But assets are up for grabs (see farmers…)

They do not have the balls to address the welfare system. Without that it really is just a spiral. We cannot keep taxing the same small % to support the growth in welfare.

This policy also makes NO sense.
If people have to pay cgt they are effectively blocked from moving unless they want to move to a less desirable area or smaller home OR have 100k or so lying around to offset the cgt AND pay the exorbitant stamp duty....

I feel like they got a load of yr 9 students and asked how they should raise revenue....
Although at this point in time i think even 14 yr old know you should be taxing wealth not income.

Punishing and pushing away the core net contributors ie people earning over 100k who live in London is asinine. No wonder half the people in my office are looking at emigrating.

I dont know what the fuck they plan to do when all the high income londoners piss off because they totally over busting their arses working 60hr+ weeks to pay effective tax of 60%+ and all labour are left with is net receivers and rishi sunaks and oligarchs who pay fuck all tax...

I've said it before but NO amount of money raised via tax is going to fix what they have got. We have more net receivers than net contributors it is not a sustainable model.
The abuse government funds is totally out of control... unless they overhaul the system, identify bad actors most effectively and reign in spending its a waste of time.
Any private company thst behaved like the gov would be bankrupt 1000 times over.

Which is why I said she needs to just come clean and say the situation has changed since we did the manifesto and we need to do something different.

They tried. They failed. I mean imagine you are Rachel Reeves and you see horrific figures claiming sickness and disability. You attempt cut but your own party says no. I don’t agree with Reeves but she is totally stuck. All she has left is classic asset tax.

No, it will deter people from downsizing and it will probably push house prices up even further.