It's all about tax.
It's all about tax.
Then let’s extend Capital Gains Tax to family homes. It addresses the key issues:
1. Valuation: The market decides how much a house is worth.
2. Deals with the negative equity question: People who lose money selling their house will be exempt because don’t make a capital gain.
3. Ability to pay: It resolves the €200 a week granny in a €750k house issue. Selling the house releases the equity to pay the tax. No sale, no tax.
To be fair, we’d probably have to let people who paid stamp duty deduct it from the tax. It won’t bring in much money as long as the property market is deflated, but neither will a property tax that pays any attention to ability to pay. But at least it would be fair and not involve the public having to scrape money together to pay an arbitrary tax which would almost certainly tear the country apart.
But here’s a really radical thought. Supposing we told local authorities that in five years time, they would set the CGT rate in their area for family homes, and that the income from the tax would provide the lion’s share of their budgets, allowing central government to cut the direct funding of local authorities. All of a sudden, being a county councillor setting the rate becomes interesting. It also introduces tax competition. Could a well run local authority afford to set a low rate, boosting property prices in the area, and making their county more attractive to live in?
Luke we don’t have to trust the local estate agent. The fact is that we now have daft and the likes of myhome.ie which are tracking the asking prices for houses and we also track stamp duty payments for the sale of 2nd hand homes. Stamp duty is related to sale price its not that hard to track it live anymore. It used to be really hard but changes in IT have made it a largely trivial problem.
What about a tax on second, third homes, or more would this fall under they’ve already paid stamp duty lingo? How would valuation work, can we really trust the local estate agent, again?
The local authorities tax idea is excellent.
It would need to be set at a different level to existing capital gains and have more allowance for inflation. Personally, I think a property tax that is rolled over onto the inheritance tax is the best solution for older people with fixed incomes in large houses.