Should first time buyers get tax relief to get on the property ladder?

jathclare

Registered User
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To raise the 20% deposit, could a scheme to allow Gross salary be invested into a bond for the purpose of securing a family home be a solution? If used for any other purpose it would be hit with full tax similar to how Pension AVCs are managed. Although it would mostly benefit higher earners, correspondingly they would be targeting more expensive properties too on average.

Perhaps with a Government top-up after a fixed term/balance target like the good old SSIA had?

I doubt the Government would give up the tax though.
 
Interesting ideas. Let's tease it out.

Are you proposing that I should be able to put gross income in a "deposit accumulation fund"? When I am ready to take it out, I can take it out without any tax if I use it to buy a house? However, if I take it out for some other purpose, then it will be taxed at the full rate.

House purchase is already excessively tax efficient, so this would be too much.

However, I have argued elsewhere, that pensions and house buying should be integrated.

Let's say that your pension fund is allowed to jointly buy your house with you. So the pension fund owns 20% and you own 80% which is funded by a mortgage.

When the house is sold, the pension fund gets 20% of the proceeds. When you eventually draw down your pension, it will be subject to normal tax.

This has its pros and cons.

It would definitely encourage young people to put more money into their pension fund which would be a good thing.

The downside would be that if house prices fall, the pension fund would take a hit.

And generally, the tax treatment of home purchase is excessively generous already.

Maybe allow the pension fund to help buy the house, but remove the CGT exemption on sale, so that there is no net cost to the Exchequer?
 
Pumping the property market with government subsidies?

Have we learned anything?

+1

Rant warning :(

The problem with all this sort of stuff is that once the provider of the product or service knows what tax relief grants, tax credits etc are available to the recipient of the goods or service, the numbers are crunched, and the underlying asset or service just goes up in price: end of.

Back in 1980 or '81 when the 1000 quid first time buyers grant was announced by the late James Tully on a Thursday, the price of new houses went up that weekend by 1000 quid.

The same applies to SEAI grants, tax credits, Med 2 work, you name it, there is no benefit to the end consumer, just like VAT, the end consumer gets screwed.

You talk to SEAI about the grants for stoves, heating systems, external insulation, they say it is pump priming :(

You ask for non grant external insulation, it can be done for cash with no grant and no VAT

Likewise with the VAT refund scheme over two years for certain building work

The service/product provider should not know how the recipient is fixed grant etc wise.

This is not my theory but is one which is 100% supported by economists such as Dr Colm McCarthy et al.
End of rant :)
 
Once I hear the word, scheme, that's it or me.

Save your deposit and save hard.
 
Once I hear the word, scheme, that's it or me.

Save your deposit and save hard.

Exactly....schemes, tax reliefs with regards to the Property market in this country only ever lead to trouble further down the line.
 
Exactly....schemes, tax reliefs with regards to the Property market in this country only ever lead to trouble further down the line.

And I'm wondering what will Noonan do today. They cannot but resist interfering in the property market. So will he reduce CGT, increase stamp duty, lower taxes for developers, do something in relation to hording of land around Dublin. He surely won't do anything more to tax landlords.
 
Theres' always a scheme :): DIRT refund for FTB for house purchases up to 20% of value.

It could have been a lot worse!

See how he used the 20% figure...does that mean he's not going to interfere with the Central Banks proposed 20% deposit figure thats caused so much debate in the past week???
Looks like it to me

Though there is a major housing announcement next week...watch this space!
 
I wouldn't get too exicited on how this will work in practise given the current low deposit rates.
 
I wouldn't get too exicited on how this will work in practise given the current low deposit rates.
Worth 20 lids a month if you're lucky enough to be able to save fifty grand over four years at 2.5%. Not gonna set the world alight.
 
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