How do we deal with falling home ownership/ build more houses - long thread

[Purple]

Taxing the notional value gain on shelter/home is a problem in my eyes. A family home which doesn't change hands and which I live in with my family has not increased my wealth except on paper.

That's an increase in wealth. Put it this way, if you didn't own that home would it cost you more to have the use of it, whether through a mortgage or by renting it? That's you having wealth and so not having to pay for the use of someone else's wealth. The people who do have to pay for the access to someone else's wealth (in the form of a house) do so with income that has been taxed at a marginal rate of over 50%.

There are different types of wealth, with different buyers/investors....and pretending they are all equal in the eyes of the general public/voters is true wizardofozcononmics

I don't understand that point in relation to taxation.

 

[Bow tie]

Interesting how most tax conversations eventually seem to centre around who we deem 'rich'.
It always seems to be the person just doing a bit better than us, rather than the super rich/ corporations and so on.
I would also wonder why we are talking about more 'common-man' taxes when the country is sitting on a 5Bn surplus.

 

[Bow tie]

That's an increase in wealth. Put it this way, if you didn't own that home would it cost you more to have the use of it, whether through a mortgage or by renting it? That's you having wealth and so not having to pay for the use of someone else's wealth. The people who do have to pay for the access to someone else's wealth (in the form of a house) do so with income that has been taxed at a marginal rate of over 50%.

I don't understand that point in relation to taxation.

It's only an actual wealth increase if I crystalize the gain. Otherwise it remains a home/shelter.
This is going around in circles- I also paid for that house, through a mortgage(access to someone elses wealth) and through after tax income at higher rates.

 

[Purple]

It's only an actual wealth increase if I crystalize the gain. Otherwise it remains a home/shelter.

No, it's still wealth. It's not liquid until you sell it but it gives you a real tangible benefit each day. Even if it doesn't it's still wealth. It just happens to also have a utility value.

This is going around in circles- I also paid for that house, through a mortgage(access to someone elses wealth) and through after tax income at higher rates.

You did, but the next guy will have to pay far more than you did for the same property. None of that is relevant though as property tax isn't there to punish people. It's there to broaden the tax base, lower property prices and shift taxes away from wealth creation and onto wealth retention because all that is good for the economy.

 

[Purple]

Interesting information on the collapse and subsequent non-recovery in construction employment here though it is a bit out of date.

Employment in the construction sector fell by 65 per cent from 236,800 in 2007 to 83,400 in 2012.
In Q1 of this year that figure was 160,000.
The population has increased by more than 20% since 2007 so we'd need 284,000 employed in the sector to match the 2007 number as a percentage of population.

Given that construction is still very labour intensive we can't fix the housing supply issue without addressing the labour supply issue and the only way we'll really address the inequalities due to falling home ownership rates is by addressing the supply side problems.

 

[NoRegretsCoyote]

Interesting how most tax conversations eventually seem to centre around who we deem 'rich'.

A rich person is someone who earns more than I do.

 

[Purple]

A rich person is someone who earns more than I do.

That's the problem, we see other people's income and say that they are rich. They see their income and expenditure and think they are doing okay but don't consider themselves rich.
If I had no mortgage/rent and no kids I'd have way more money than I need on half my income.
So I suppose the first question to be answered is what constitutes "rich"?

Is rich and wealthy the same thing?

Should we be giving welfare to someone with a low income who owns a house worth €3 million while we tax the hell out of a high income family with a big mortgage and a gaggle of kids?

I love that definition of a middle class socialist as someone who doesn't care about the poor but who just hates rich people. It seems quite apt in many cases. Some people seem to conflate socialism and begrudgery.

 

[Bow tie]

Should we be giving welfare to someone with a low income who owns a house worth €3 million while we tax the hell out of a high income family with a big mortgage and a gaggle of kids?

For me, the idea I was sold was that I would pass through each life stage from one to the other....with the ups and downs of each.
Single; I paid more tax than families, with a family; later our ages and incomes had risen and we pay substantial taxes due to being in the higher bracket. 10's of thousands in childcare, mortgages- this is simply life!
Hopefully when I get to 65, having been a higher tax payer most of my life and paid for service after service, I won't be forced out of a home due to it's value on paper, which I may not have the funds to pay taxes on at that stage.

 

[Purple]

For me, the idea I was sold was that I would pass through each life stage from one to the other....with the ups and downs of each.
Single; I paid more tax than families, with a family; later our ages and incomes had risen and we pay substantial taxes due to being in the higher bracket. 10's of thousands in childcare, mortgages- this is simply life!

Yes, but is it societally desirable or fair at this time, particularly considering the declining rates of home ownership.

Hopefully when I get to 65, having been a higher tax payer most of my life and paid for service after service, I won't be forced out of a home due to it's value on paper, which I may not have the funds to pay taxes on at that stage.

When you say its value on paper do you mean its real actual realisable value?
If your income is low you should be able to refer your property tax. That way you won't be forced out of your home, even if you are in the small minority of pensioners who end up poor.

 

[joe sod]

We have always had a limited supply of houses but we generally had a stable population of around 3.5 million people for many years therefore our construction industry as disfunctional as it was was able to service this population.

Houses were relatively cheap and affordable for those with jobs because there wasn't huge competition for houses ,the competition was for good jobs not houses.
We didn't have net migration but immigration therefore the competition for houses here was removed.

Now we have the complete opposite situation with a rapidly rising population and people coming here from all parts of the world for work. It is the same all over the western world everyone wants to live and work in the west. This is an unprecedented situation that we have never had before in our history.
Therefore it is very easy to get a job but very hard to get a house. Unfortunately we do not live in a utopia and there are always some things that are restricted and difficult to obtain. It was always thus.

 

[Brendan Burgess]

I have started a new thread to focus on the inequality issue here:

How do we deal with the inequalities due to falling home ownership rates?

We have a serious and growing problem that a large group of Generation Rent will not be able to ever get on the housing ladder. This has serious implications. Ownership of one's home has generally led to lower housing costs and increased wealth. While long-term renting is expensive and...

www.askaboutmoney.com

Feel free to continue to discuss other issues in this thread.

 

[Bow tie]

Yes, but is it societally desirable or fair at this time, particularly considering the declining rates of home ownership.

'At this time' - exactly, and a cyclical market cannot be the basis for fair policy.

Deferring property tax (at a punitive rate) still taxes the PPR again, after being bought through taxed income and having paid property tax all the years of work one could afford to- also from after tax income. I think the existing nominal property tax we have is fair- and paid over a lifetime, this I can accept.

I disagree with anything punitive or with unintended social consequences. Demonizing owning a PPR due to its value is not the fix for the problems the next generation have. You also run the risk of gentrifying certain urban areas and causing property to climb even more!

 

[cremeegg]

It's only an actual wealth increase if I crystalize the gain. Otherwise it remains a home/shelter.

A house bought in Dublin in the 1990s was in a decaying city with few jobs, two universities and a dismal society. The same house today is in a city with vast employment opportunity, four universities and a thriving society.

Your house may not have changed but you have benefitted from the improvements in Irish life, and your children have probably benefitted even more. That is why your house has increased in value. So even without selling you have reaped the benefit.

 

[Bow tie]

A house bought in Dublin in the 1990s was in a decaying city with few jobs, two universities and a dismal society. The same house today is in a city with vast employment opportunity, four universities and a thriving society.

Your house may not have changed but you have benefitted from the improvements in Irish life, and your children have probably benefitted even more. That is why your house has increased in value. So even without selling you have reaped the benefit.

General benefits gained from where you live? Most parts of Ireland have improved since the 90's.
Dublin was absolutely not a decaying city in the 90s as someone who was there in the latter part of that decade in college in one of the Uni's.

 

[T McGibney]

A house bought in Dublin in the 1990s was in a decaying city with few jobs, two universities and a dismal society. The same house today is in a city with vast employment opportunity, four universities and a thriving society.

Your house may not have changed but you have benefitted from the improvements in Irish life, and your children have probably benefitted even more. That is why your house has increased in value. So even without selling you have reaped the benefit.

Dublin had at least 3 universities in 1990, TCD, UCD & DCU.

I spent a large chunk of the summer of 1991 living in Dublin. It was a great city in which to be young.

 

[cremeegg]

Dublin was absolutely not a decaying city in the 90s as someone who was there in the latter part of that decade in college in one of the Uni's.

It was and it still is. Buddleia sprouting from buildings in the city centre.

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The economic situation has been transformed. Of course not just in Dublin, throughout the country.