Should stamp duty be abolished to help the housing market?

[Dorothyperky]

Nothing is selling in our area over £500k (south).

Every agent near us is seeing less sales and fewer instructions.

Also would it make a difference to you?

Why?

Why do we pay 20% VAT when we buy a bar of chocolate or a pair of socks?

Tax is the cost of your admission ticket to a civilised society.

Few of us are complaining about paying tax per-se. We're complaining about the nonsense of THIS tax when far better alternatives could exist.

You said all sellers were buyers and have already paid SD. Obviously, since 2014, a much greater proportion of buyers have. Of those who bought 20/30/40 years, only a small percentage did so. Therefore, overall, many home owners paid zero SD.
Your other point is totally separate. I agree that it is ridiculous that all governments, not just Labour, seem to think that people on 50k plus are rich and can be rinsed for unlimited tax. The tax bands have been frozen for the last 5 years and ongoing so far more people are apparently 'rich' despite inflation having gone up maybe 30%, probably much more for essentials such as rents/mortgage rate increases/food/domestic energy.

There are real practical hurdles to shifting it to the seller

Exactly right

Yes, maybe they can just pay it twice if the house value has jumped by a lot? TBH the gate will soon be closing on that sort of price increase so the government need to shake a leg (of course they won"t do anything and things will just rumble on as they are until the bond market finally calls time on the UK property Ponzi)

Such as?

But if the money goes into the property value you get it back when you sell. You don’t get it back if it goes to the government!

Can I ask what you consider a "very low offer"?

How does the money go into the property value?

Yes, it is a solid drop.

Yes, I've no problem with disagreement!
I don't agree re poll tax for two reasons. The first is what @Cherriesandapples1 already said. It isn't always correct that 4 or 5 adults in a multi generational household use more council services than the older couple next door. Secondly, it seems to me to be a way to penalise the less well off. The theoretical elderly single person/couple who continue to live in their large, 4 bedroom detached 20 years after their children left home have the choice to downsize if they want to reduce their bills. They have likely paid off their mortgage long ago. The multigenerational household, in most areas in the UK, is likely to be sharing housing because it has become too expensive for the younger members, and perhaps even the older ones, to afford without joining forces. What other choices do they have? It's a little similar to the argument the home those who are paying mortgages should not be bailed out because it is unfair to those who are generally poorer and forced to continue to rent.

Or you mind lose it all when you sell and you probably need to pay it back to the bank several times over in interest. I'm sure you have considered the interest payments but it's funny how many don't think about this and purely focus on the monthly payments.

I missed this. Congratulations.
Did you say that you were going to make a loss on the property compared to your purchase price? How much of a loss are you making (percentage wise)? I hope it's not too significant for you.

honestly we're at a point where any AI will explain this better than I will, but the Chartered Institute of Taxation have a web page about it:

https://www.tax.org.uk/blog-why-transferring-sdlt-from-the-buyer-to-the-seller-is-not-straightforward

Ultimately however, the cost is actually born by both buyer and seller in the transaction, so it makes little difference. However if you moved SDLT onto sellers they would most likely raise asking prices to compensate which (under the current system) could just increase the total tax take by HMRC.

The deeper problem is not who the tax is directly incident on, it's the existence and size of the tax, and the impact it has on dragging down the volume of transactions, reducing mobility, making it harder for buyers up and down the chain from downsizers to first time buyers, and ultimately slowing the economy.

Oh, you mean like a land value tax.

There will be plenty of complaints from owners of land, though.

Volumes are down because we are nearing the end of a massive cheap debt property Ponzi, the pop will be very loud and much needed but many will be financially ruined because they just simply borrowed too much.

A tax based on the value of real estate has some very great advantages.

For a start, it is very hard to hide, and impossible for the owners to shift it to an offshore tax haven. When owners threaten to move overseas their threats are even more empty than usual.

Council Tax is not a very good one, because, although at the lower values, it is somewhat proportional to value, by amazing chance, it has been designed in a way that bears more heavily on the (mostly poor) occupants of low-value property than on the (mostly rich) occupants of high-value property.

Stamp duty is somewhat proportional to the value, but is only charged at time of sale or transfer, which I do not think is a very good way to tax.

Council tax "could be" the answer if it were tweaked. Obviously we need a lot more bandings as there are too few at present. The property values also need to be reviewed far more frequently to take account of local market conditions, extensions & improvements, etc. It makes no sense that someone with a home worth a million pays the same council tax as one worth 10 million. Or that it's still based on the home as it sat a decade ago despite a couple of hundred thousands having been spent on extensions and improvements. And further "tweaks" relating to number of occupants, their ages, etc.

Councils have data on occupants via the electoral roll, they know about extensions/improvements via their planning portal and building regulations, the land registry have records of "sold" house prices, both on an individual level and locality level. 90% of the data is readily available and just needs pulling together.

Current council tax is a very blunt tool, harking back to the days when such data wasn't readily available at the click of a mouse. Time to modernise it.

Your faux concern is palpable

I'll swap you for the Spanish stamp duty equivalent. I paid 69,000 € for my house purchase in Spain, and in the Uk I would have paid £20,000 (23,450 €).

Local government expenses in the U.S. are largely funded by property taxes based on property value, and I agree that, overall, it's a better, fairer system. The only issue is that poorer areas, which collect lower property taxes, need additional funding, especially for education. That topping up is done according to a state formula, mostly from income tax receipts. At least that's how it's done in New York, where I live.

What you pay in state and local taxes is deducted from your taxable income at the federal level to avoid taxing the same income twice.

In answer to the question @rainingsnoring the offer is 20% less than the original asking price but we were forced to reduce . We've since had a new mortgage offer so we may not sell as we need to spend at the same level. £40k to move.

sounds like wishful thinking by somebody with aspirations to buy. If anything the slow down is just due to higher borrowing costs since rates went up.

Yep, although I refer to it as a Home Value Tax since Land Value Tax has different connotations to some people. It would be up to the government to work out how to levy the tax on non-domestic property and land. It's far easier to do on domestic property given the Land Registry and ability to track forward value from last sale. Obviously the LR would need to be updated to include all the currently missing properties.

SDLT is really sporadic as it depends on sales when sale may slump. HVT would be constant and would also hit all the international owners too. The main hope is to get people to stop seeing property as an investment and also stop cases where £20M homes pay the same tax as, say, £1.5M homes.