Irish Times "CGT exemption on family home at risk in the Budget"

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Brendan Burgess

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Prospect of capital gains tax on family home raised
Move is among tax reform options put forward by Department of Finance group

Among the options outlined are allowing relief only for homes up to a certain market value, or allowing relief on gains up to a certain cash limit with tax being imposed on any sum above that amount.


The officials also raise the possibility of introducing a new lower rate of capital gains tax that would apply only to gains made on the sale of the family home.
 
Hi Brendan,

I read the Tax Strategy Group report last night. Frankly, it's a shambles. Classic "Yes, Minister" stuff ("on the one hand, on the other hand...).

"With regard to the rate, it could be increased or decreased"

Well that's very insightful!

This is a non-story.

Gordon
 
I'm a homeowner (and I'm clean shaven) and I don't see a problem with this as a progressive measure if implemented properly.

For example:
1. Either an exemption or a rollover relief for people trading up.
2. Some sort of indexation relief applied to the PPR, to allow for a reasonable amount of inflation.
 
This is kite flying ahead of the budget, it'll get dropped and all of the FG backbenchers (and maybe the FF ones too?) can go back to their constituents and tell them how they stopped those meanies in the Department from taxing homes.

A victory for the homeowner when in reality, nothing has changed.
 
It could also be seen as a tax on downsizing.

The older couple who purchased 20 years ago in Ballsbridge. Value of home has increased over the 20 years. The family has flown. They don't need the larger house so want to move to a smaller house. The Government take advantage of their situation.
 
The home sales exemption from CGT is capped at $250k ($500k for a couple) in the US.

I would have thought that it would be perfectly reasonable to introduce a similar cap here. It never made a lot of sense to me that somebody could make massive untaxed profits on the sale of their PPR.
 

hope you slept well
 

A country where's there's effectively no inheritance tax up to the $5.5m level...

This would probably lead to further distortion in the market as empty-nesters would be motivated to hold on to their homes until death, at which time any uncrystallised CGT liability is extinguished.

And a cap at the $250k/€212k level would be obscene in the context of house prices here.

As I posted earlier, this isn't even kite-flying, it's an extract from a low quality Yes, Minister style report which tries to summarise every option. This would have people burning effigies in the streets and would see FG and FF out on their ears.

Gordon
 
Never going to happen but I like the fact someone has considered it. If it were to be implemented, I don't think there should be any lower threshold - why should those with low value houses be exempted from a gains tax if their house has increased in value?
 
Gordon Gekko said:
This would probably lead to further distortion in the market as empty-nesters would be motivated to hold on to their homes until death, at which time any uncrystallised CGT liability is extinguished.
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Yeah, I agree that it probably would have a marginal "lock in" effect at the fringes. On the other hand, it might encourage some people to invest a greater portion of their income in more productive assets, which I think would be beneficial from a societal perspective.

Gordon Gekko said:
And a cap at the $250k/€212k level would be obscene in the context of house prices here.
Click to expand...

Well, that's pretty close to the average residential property price (per the CSO) so I would have thought an exemption from CGT on gains of up to $250k for an individual would still be relatively generous. Bear in mind that acquisition/disposal and improvement costs should also be deductible.

In any event, the level of any cap is not particularly important. I just think it's strange that somebody can make a six or seven figure profit on the sale of an asset whose value is partly attributable to public expenditure (roads, policing, etc.) without being required to make any contribution to the exchequer.
 
Sarenco said:
I just think it's strange that somebody can make a six or seven figure profit on the sale of an asset whose value is partly attributable to public expenditure (roads, policing, etc.) without being required to make any contribution to the exchequer.
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(a) Property Tax.
(b) Would they not have been paying tax on the goods and services used in the acquisition and maintenance of said property?
(c) Please explain how 'policing' lead to the differential effect in the value of the asset vis a vis all the other properties in this jurisdiction. Would this mean that if the government close a police station in an area, that all the property owners can sue the government for devaluing their asset?
 
FF joined SF and people before profit to do away with water charges They are going down hill since .The FG party for some reason don't want to fill the gap in the market it looks like 60% paid there water charges.They are all promising to spend more money we cannot tax working people any more so new taxes is there only option if they want to spend more,They will bring in new taxes before cutbacks they will be more sneaky stealth taxes i expect they will be going after people with money tax a bit here tax a bit there and keep rising it every year,they are all following Paul Murphy brand of politics.

Just look at USC up to now this was paid mostly by paye people who paid away higher prsi until the USC came in it was then put on unearned income they promised to do away with it looks like USC is not going away anywhere soon .

It was SF who were pushing for the USC not to be done away with now all parties hold the SF view, taxing Unearned Income/Wealth more is the new show in town,
 
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(a) The sale of a residential property doesn't crystallise an LPT liability.
(b) Yes, they would, but what of it? Again, such expenses should be deductible in calculating any taxable gain.
(c) I didn't say anything about differential effects.
 
Sarenco said:
(a) The sale of a residential property doesn't crystallise an LPT liability.
(b) Yes, they would, but what of it? Again, such expenses should be deductible in calculating any taxable gain.
(c) I didn't say anything about differential effects.
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(a) The increase in the value of a residential property in theory could lead to an LPT liability.
(b) You now accept that they are probably making a contribution to the exchequer?
(c) Please explain how the increase in the value of the asset is attributable to public expenditure. You said that the value of the asset is partly attributable to public expenditure but if it is the core value of the asset that is in question that is in the scope of property tax which is based on asset value not CGT which is based on asset increase.
 
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In a lot of parts of rural France, you hear the stories of two sale prices... what was actually paid and what was declared as paid - to avoid such taxes as this! Added possible bonus, if you declare a lower value on the property, your property tax would also be lower.

As far as I'm concerned, any new tax introduced without a mandate in a general election does not have the consent of the people, and deserves to be treated as such by the people.
 
Its the same in rural Spain, You agree a price for the property, then you agree how much will be in cash
 
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