Homeowners must be taxed on equity in homes to address crisis, MPs told

[Pip in a Poke]

Just throwing a curveball into the mix.

I believe there is CGT on the sale of your residential property if you haven't been resident for a minimum period

To claim the whole exclusion, you must have owned and lived in your home as your principal residence an aggregate of at least two of the five years before the sale (this is called the ownership and use test). You can claim the exclusion once every two years.

Otherwise, what's the stop peeople from buying a fixer upper, making it your primary residence, Doing it up & selling it 6 minths later & then moving into another one & rinse & repeat.

Kerching!

[scooterscot]

This is what they do on Sark, the amount of tax you pay is linked to the value of your property. No stamp duty is paid.

It's a good idea.

[TheCyclingProgrammer]

CGT would be a tax on sale, which to be fair to you is what the article referenced suggests. JB (I think) and I are suggesting something different which is an annual tax on assets, offset by reductions in taxes on productivity. It would encourage a more efficient use of assets, particularly of property (or for the purists, of land).

So who values the property each year for the purposes of establishing equity? Does it remain fixed at your last remortgage valuation until you remortgage again? Does it go up at a fixed rate of inflation each year?

[NotAllThere]

...Does it remain fixed at your last remortgage valuation until you remortgage again? Does it go up at a fixed rate of inflation each year?

Or maybe it'll just be a percentage of the amount you paid less the outstanding mortage. Declare it each year, hand cash over.

[AtW]

Where to? Plenty of countries have CGT on house sale and wealth taxes.

How about Monaco?

[Mordac]

Obviously. Why? As you say - it depends on the %ages. Effectively the stamp duty is merely defered to the sale, and is based on selling price rather than purchasing.

You buy a home for 200K. You sell it for 300K and buy a new home for 600K.

• Currently you must find an additional 30K to cover the stamp duty.
• New regime, you pay x% of (300K - mortgage). Depending on your mortgage, the equity tax would have to be 10% or more for you to be worse off.

You sell the house after 30 years for 1M, and buy a 500K property in the countryside.

• Currently, you'll need to find an additional 25K for stamp duty. Total paid: 55K.
• New regime, you pay x% of (1M - mortgage). Max total paid x% of 1.3M. Depending on your mortgage, the equity tax would have to be more than about 4.25% for you to be worse off.

The equity tax would have to be closer to 50% to make it even close to making a difference, and therein lies the problem.

[Eirikur]

And nobody answered the question what if you loose equity you buy a house for 300k but because of brexit or another future crisis you can only sell it for 200k will the government pay you? (probably not)

[jamesbrown]

And nobody answered the question what if you loose equity you buy a house for 300k but because of brexit or another future crisis you can only sell it for 200k will the government pay you? (probably not)

First, shut it, you tart.

Second, WTF is "loose equity"? A measure of nlady's productivity?

[NotAllThere]

And nobody answered the question what if you loose equity you buy a house for 300k but because of brexit or another future crisis you can only sell it for 200k will the government pay you? (probably not)

So long as the price you sell it for is more than your mortgage you pay tax on the selling price, less your mortgage.

If you sell it for less than your mortgage, you'll probably have no tax to pay. Of course, your lender will be after you for the shortfall.

[NotAllThere]

The equity tax would have to be closer to 50% to make it even close to making a difference, and therein lies the problem.

OK, so your reasoning is that:

1. In order to affect the housing market, an equity tax of around 50% would be required.
2. At that level, no-one will ever move house, as it will be too expensive.

But why would it be set at 50%?

What would be the result if it was set at 7.5% (for example)?