Property tax - definition of seller?

[choccychipcookies1988]

Sorry I know everyone is probably bored of this and who knows what will happen. But have I read it right that the tax is paid by the seller on the property sold for the rest of their life? So if we downsized from a £1m property to a £700k property we’d be stuck paying 0.54% on £1m (less any 500k cap) in property tax for the rest of our life? Or have I misunderstood? Appreciate all hypothetical but wondering if I am misreading what is out there

That doesn't sound logical?

No agree that’s why I think I must have misunderstood or misread the context but who knows. A lot of articles just say the property tax is paid by the seller so not sure

It will be taken from your sale proceeds. But unclear how many years it would apply retroactively. Perhaps a maximum 10-year lookback would be a fair starting point (so 10 × annual % tax if owned since 2015 at least).

Pretty sure it's paid by the buyer isn't it? As it's to replace Stamp Duty which is currently paid by the buyer. Instead of a one off lump sum paid on purchase if the property is over £500k you will pay an annual tax based on a percentage of the value of the house for the time which you own it. Once you sell it, it will be the new owners who pay it.

Yes that’s the way I understand it. Also wouldn’t be payable by anyone who paid stamp duty on their purchase.

It will be charged on the sale. Stamp duty will also most likely remain.

Yes, if it comes in, it will be additional to stamp duty I imagine. The idea is to tax more of the equity gain - to help with the black hole in government spending. Government can't afford to not pick this fruit anymore unfortunately.

Some of you may find this useful:

hoa.org.uk/news/new-property-tax/#:~:text=The%20new%20property%20tax%20would,would%20rise%20annually%20by%20inflation.

Why do you say that? All the news reports seem to says it would be instead of stamp duty.

I wouldn't worry about the small print until it actually happens. Who knows if it will, what form it will take or anything about the detail. I guess it would push house prices up (if sellers have to pay it) as sellers will try to pass it on to buyers in the actual house price, not sure if that is the desired effect.

If they hike taxes, house prices will further come down. There is no way buyers can stretch further in this environment while housing inventory is at record. Labour wants lower house prices, obv.

Then it will only be desperate people that sell, if they can. The uncertainty has stalled the market currently, no one knows if taxes will increase or if prices will go up or down if the budget does introduce changes. Can buyers afford to buy, can sellers afford to sell, as most people's biggest asset can they afford to make a loss? And the last housing crash left many thousands of people in negative equity and totally unable to sell.

CGT will change, not stamp duty.

CGT is easy to administer as it happens when something is sold.

Stamp duty is cheap to collect and does not require ongoing "annual" checking for missed payments

CGT doesn't apply to your principal private residence which is what people are buying and selling regularly. Whereas Stamp Duty applies to all homes apart from those under the threshold. It is Stamp Duty that the proposed property tax will replace.

Yes that's what I would expect too Papricat, prices will come down. To be fair that would be a good thing on the whole. Wait and see what the actual detail is though. Its all speculative for now.

I’ve re read the news today and it sounds like you don’t actually pay the property annually, you just pay the totalled annual property tax when you sell. So if the annual property tax on my place is £1k per year, and I sell the house in ten years, I’d pay the £10k on disposal. As before who knows what will happen, but I’ve at least worked out what they mean by seller

This isn't a thing, they are simply throwing around ideas. No point getting worried about it until there are actual changes implemented.

read the flipping link summarising the proposals before making a fool of yourself telling someone else that they are wrong

did you not read the link you yourself before saying it might be useful?

"In a separate move, the Treasury is also said to be considering introducing a ‘mansion tax’. It’s understood the October budget could see the current exemption from CGT under private residence relief ending for properties above a certain price threshold."

why do you think it says "separate"?
That is because changes to CGT are much higher up the probability list than changes to SDLT.
CGT increases are much more palatable to Labour as they can present it as tax on the wealthy, not a tax on anyone who wants to buy a home.

@Wot23 OP was asking about property tax not mansion tax though. The proposal is for Property tax to replace Stamp Duty. So your statement "CGT will change, not Stamp Duty" is incorrect in the contact of the proposed Property Tax. Anyway I have no intention of entering into a dialogue with you about proposed taxes that may not ever become reality.

great, go away then and in future don't tell people they are wrong when they express their opinion in a debate on whether property related taxes may change. CGT is property related and much more likely to change, there is nothing whatsoever incorrect in that opinion.