Replacement of Stamp Duty with Land Value Tax

[AnalyticalChick]

I was reading in Money Week that all the political parties see an ongoing annual Land Value Tax as the preferable alternative to Stamp Duty.. The change is likely go ahead within the next few years. Would MNers prefer to pay Stamp Duty on an initial property purchase, or an annual LVT on the value of their property?

Is it more evil than Council Tax?

AnalyticalChick I guess you're right, and a host of solutions will spring up. Change creates markets. I'd rather they collect the charge when the house changes hands without the kind of rake-off that an equity release firm would take. As I understand it (without much real knowledge) they are fairly exploitative.

It works in the opposite way to the poll tax. Plus it has broad support across the political spectrum, so there isn't really anywhere for opponents to go. I read once that Churchill was a big fan of a LVT.

How simple-minded is it to believe that only "billionaires with a big estate" will be affected! This will hit anyone who owns anything better than a hovel, all to feed Corbyn and McDonnell's fantasy of a Venezuela in the North Sea.

I'm just saying before this is cheered on look at what happens to other places with LVT/property tax. I have lived in areas with LVT, and stamp duty is a blessing compared to it. The tax will always go up, taxes always do, and you wont get anything more in return. In the area I was in, LVT was applied no matter the income or house cost. It kept house prices artificially low, because the LVT was a huge financial burden, and means that houses are near impossible to sell despite a plethora of jobs/higher income than UK. Rents are also very high. Check out house prices in Texas and ask yourself why such large houses would be so cheap despite lots of jobs... because of property tax...

@FunRequirement

I'll say it again.

All your figures are made up because you are using a percentage plucked from the Daily Telegraph, which even they later admitted is not a proposal by any political party.

You might just as well wail that we would all be hard up if income tax was increased to 95%

That would be another made-up complaint.

I can't see lvt happening anyway.
For years the government have said that it is not feasible to value every property in the country to change council tax bands.... can't see them doing this
For example I believe that the cheapest borough for council tax in London is Westminster, where a 100m house pays the same council tax as a 2 bed flat in some parts of zone 6 worth 300k... a lvt would correct this discrepancy but so would introducing new council tax bands based on value... to be honest sounds like 6 of one half a dozen of the other

@FunRequirement By its nature, lower valued houses would be taxed lightly, and higher valued houses would be taxed heavily.

I just found this website campaigning for a LVT. It has a speech from Churchill calling for a LVT back in 1909:
www.landvaluetax.org/current-affairs-comment/winston-churchill-said-it-all-better-then-we-can.html

Funrequirement
Houses are cheap in Texas
because land is cheap in Texas
its nothing to do with the annual land taxes.

If there is an annual land tax then the SDLT would be cut tom ore of a "processing fee"
Every house on Zillow lists the Annual Land taxes - they are nothing to be scared of.

Council Tax is NOT a property tax (if it was then a mansion in Holland Park would pay more than a semi in Newcastle which it does not at present)
Council tax is equivalent to state / county / township taxes in the USA
it is for the provision of services
and because it is capped at band H, VERY regressive

Here is a house in Texas with its land taxes shown
www.zillow.com/homes/for_sale/Katy-TX/pmf,pf_pt/house_type/62601552_zpid/18800_rid/globalrelevanceex_sort/29.959247,-95.689889,29.725178,-95.983429_rect/11_zm/

Here is a house in New York State
www.zillow.com/homes/for_sale/Putnam-County-NY/pmf,pf_pt/house_type/83944745_zpid/1343_rid/globalrelevanceex_sort/41.626991,-73.461457,41.222309,-74.048539_rect/10_zm/

Would far rather pay a one off tax on purchase than have to pay as you go. I then know I have paid it and don't have to cough up more.

I don't like council tax either. Income tax and capital gains tax are fine as you actually have cash to pay it with.

Inheritance tax is also fine. I would far rather pay tax when I am dead than as I go. I don't have enough assets to worry about that though.

@Ta1kinpeace The yearly taxes of that house in Texas is $4,465, that has to be paid every year... much more than stamp duty, so I don't really see your point. I don't think the average incomes here could support it. That's also far more than the average UK salary could afford and still qualify for a mortgage. There is no way that a 2000+ sq ft 4 bed house would be valued at $195k in the UK

The east coast is an anomaly because of the people that NYC attracts. Plus that house's taxes still stand at $8759 per year, and that's only for being at around $350k. If you compared like for like in the south with regards to taxes, you would see some interesting parallels that correlate to property tax amounts. Land is cheaper and that is a contributor to it imo.

Funrequirement
The Katy house is a 4 bed 2 bath house in a decent suburb
$4000 a year is not a huge amount.
And the principle of an LVT is to stop those with property benefiting unduly from anomalies
that is why the Economist and the FT like it

Saying that "the East cost is an anomaly" is like saying the whole south of England is an anomaly = rubbish
there are grindingly poor areas in New York State (have you ever BEEN to Walton) same as there are in Hampshire (Paulsgrove)

If you think Texas and New York are pretty much the same, that they wouldn't attract different sorts of people than that's your opinion. From my experience people are passionate about living on the east coast like they are on the west coast and will pay a premium to do it.

This is an appalling idea.

Ok seriously...

how about the government use the money they already get from taxes more effectivily? rather than waste billions on projects that are mis-managed, over budget and not delievered on time before talking about more taxes on people who probably can't aford it? Or how about the loopholes that allow the likes of amazon, google, apple and starbucks to not pay corperation tax? maybe then LVT would not be needed.

The moral of the story is that if you live in a high value house and are on a low income, it is probably best to sell now, before the rush.

I’m not in support of LVT as this adversely affects those on low fixed incomes eg pensioners, and those who become unemployed or ill. The cost of continually re-evaluating properties would be astronomical as well. Much as I would like to tax the Uber rich more, unless we only tax above a certain value threshold (probably a non starter), I’m not sure this will be fair all round and not a progressive tax. Plus it has the potential to be continually increased and a captive audience to inflict it on. And yes, rents are bound to increase making it harder yet again for first time buyers.

I fully support inheritance tax and will be due a lot on our estate.

I think it might be better to spend the money on up-banding houses for council tax. But there never seems to be money for that, so not sure where the money to evaluate all inhabited land in the uk is going to come from.

The cost of continually re-evaluating properties would be astronomical as well
No, its done on the market value as per Land registry
no costs at all over and above the current data collection

this adversely affects those on low fixed incomes eg pensioners, and those who become unemployed or ill
How ?
Its not an additional tax, its another tax in the armoury that would allow others to be frozen
and as the UK (for now) has a universal health care and welfare state, there would be allowances for unemployment
as in ALL THE OTHER COUNTRIES that operate versions of LVT

@ta1kinpeace, unless you seal a different version of English, addition and another in this context mean exactly the same thing.

This is an additional tax you have to pay on top of what you already pay.
This is another tax you have to pay..

Same outcome on both from what I can see.

there would be allowances for unemployment as in ALL THE OTHER COUNTRIES that operate versions of LVT

False.
"If a homeowner doesn't pay his or her property taxes, the government will put a tax lien on the property. The government may then sell the lien to an investor who is entitled to collect the debt along with penalties and interest. If the homeowner can't or won't pay up, the investor can foreclose on the house and then sell it for a large profit. In a booming housing market, this type of investment can be very popular. Unfortunately, low-income elderly individuals are often the victims in these investment schemes. It doesn't matter how small the tax bill is; the government can get a lien on even the smallest tax bill."

www.elderlawanswers.com/not-paying-property-taxes-can-lead-to-loss-of-home-6555

@Whatthefoxgoingon Apparently it is very easy to do now with new technology and the Land Registry. Plus, it is not valuing individual houses, it giving official values to plots of land, basically from size and broad location. The civil servants and politicians who are working on it seem to think it is now doable with new technology.