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

[torblednam]

Well actually that's not what the thead is about.
It's titled "CGT exemption on family home at risk in the Budget."
That is one of the topics that the discussion of that title has led to.

No one is able to come up with a convincing definition of pornography.
And yet, we seem to able to recognise it when we see it.
We're humans.

And housing is a basic human right. So much so that if you do not have a house the state will step in and provide you with accomodation.
Just as we expect the health sector to be treated differently to say, gyms.

Therefore people expect PPRs to be treated differently to other types of assets, especially commercial ones. That doesn't mean it is untouchable, after all, we have property taxes, but it does mean that anyone with any understanding of human nature should appreciate they will be met with a different response when it comes to one's home versus other assets. That there is a much higher threshold of justification we expect when it comes to the government interfering in PPRs versus other assets.

OK we're back on track!

So, in your view would a hypothetical tax at somewhere between 20% - 33% on GAINS in excess of 250k per individual owner (i.e. 500k for a couple) on disposal of a PPR, interfere unduly with the human rights of the disponers?

 

[odyssey06]

OK we're back on track!
So, in your view would a hypothetical tax at somewhere between 20% - 33% on GAINS in excess of 250k per individual owner (i.e. 500k for a couple) on disposal of a PPR, interfere unduly with the human rights of the disposers?

It would interfere with their rights... So, there has to be a compelling reason and justification for the government to intervene, taking into account the interventions (i.e. property tax) which the government has already made with these rights.

I don't consider "well we have CGT on other assets" to be a compelling reason.
Or "we can always do with more tax" to be a compelling reason either.

Remember earlier in the thread I have said it would be reasonable for the government to seek clawback from GAINS for support they have given to the property owner (e.g. mortgage interest relief, first time buyers grant). But the clawback must be to the value of the level of support given.

Property tax was introduced to fund 'essential' local services, and one of the justifications for taxing PPRs in this way was to avoid the fluctuating \ unpredictable nature of transaction based property taxes such as stamp duty or CGT. For a government to then turn around and attempt to take the same asset they would have to have a compelling reason and sound fiscal basis for doing so.
They do not.

We have taxes on property at death. This is justified on the basis of the need for equality in society which it is felt is diminished by allowing significant assets to be passed entire from one generation to the next.
That justification does not apply here - because if the current owners cash out they will still be hit with inheritance taxes when they attempt to pass onto the next generation.

So I can't think of a single compelling reason why the government would be presently justified to further infringe on the rights of PPR owners.

 

[Early Riser]

Folks - It is the long weekend of peak holiday season. How about getting into the mood with a competition to re-name this thread?

I'll start off with "The Wormhole of Absurdity" !

 

[torblednam]

It would interfere with their rights... So, there has to be a compelling reason and justification for the government to intervene, taking into account the interventions (i.e. property tax) which the government has already made with these rights.

Remember earlier in the thread I have said it would be reasonable for the government to seek clawback from GAINS for support they have given to the property owner (e.g. mortgage interest relief, first time buyers grant). But the clawback must be to the value of the level of support given.

As someone who recently availed of the HTB scheme, I disagree. Thanks directly to that scheme, my young family are now in a house and my wife and I fortunate enough to be financially able to continue to grow said family.

Without the scheme we would've had to put numerous things, including trying for another baby, on hold for god knows how long as property prices keep rising. And ultimately we'd have spent more on the house, and a lot more over the term of a mortgage...

I actually struggle to try and place an accurate monetary amount on the true value of that scheme to us, but I'd certainly say it's a multiple of the actual tax rebate involved.

If, sometime in the future, we were in the extremely fortunate position of selling our (most likely unmortgaged by then) house for in excess of 800k, I'd gladly write the cheque for the tax on the excess, we'd still be laughing all the way to the bank.

Now don't mistake me for some kind of lefty, I'm definitely not, but I do believe that the tax burden ought to be borne by those who can best afford it, and that is the wealthy. I very much consider someone in the position of being able to cash >250k out of their PPR to be wealthy enough to share some of that excess with the rest of society. Again, just to stress I'm no socialist, and how taxpayers' money gets (mis)spent is a whole other argument.

 

[odyssey06]

If, sometime in the future, we were in the extremely fortunate position of selling our (most likely unmortgaged by then) house for in excess of 800k, I'd gladly write the cheque for the tax on the excess, we'd still be laughing all the way to the bank.

Well I am glad that things have gone well... and we can disagree on the level of clawback the state should be entitled to on the basis of the support directly given.
But I suppose the point I was trying to make more generally is that I think where the state has directly given support, this is a justification for some sort of clawback; and that where a homeowner either did not receive such support - or did not avail of it; that the state is therefore lacking in a basis for claiming from the value of the asset.

Our entire tax system is predicated on the basis of those who can afford to pay the most are taxed the most, and we have one of the most progressive tax systems in the world. But that doesn't mean that every new tax is immediately justifiable just because it is applied to higher levels of wealth.
Especially when (a) the state is already taxing this asset both via property tax and inheritance tax and (b) the tax is a profoundly unreliable source of revenue, which recent Irish history has shown to our cost.

 

[jjm]

Well actually that's not what the thread is about.
It's titled "CGT exemption on family home at risk in the Budget."
The unique nature of PPRs is only one of the topics that the discussion of that title has led to.
I have not read a convincing explanation of why the isolated removal of the CGT exemption is a good idea (either at the level of fiscal policy or pure politics) which is its primary topic.

No one is able to come up with a convincing definition of pornography.
And yet, we seem to able to recognise it when we see it.
We're humans.

And housing is a basic human right. So much so that if you do not have a house the state will step in and provide you with accomodation.
Just as we expect the health sector to be treated differently to say, gyms.

Therefore people expect PPRs to be treated differently to other types of assets, especially commercial ones. That doesn't mean it is untouchable, after all, we have property taxes, but it does mean that anyone with any understanding of human nature should appreciate they will be met with a different response when it comes to one's home versus other assets. That there is a much higher threshold of justification we expect when it comes to the government interfering in PPRs versus other assets.

the government took over 2 billion out of private pension funds people did not like it but put up with it ,the take 41% i think on intrest earned we put up with it they put USC on unearned income we put up with it .I could go on and on

Some people don't understand Because they may have secure employment and the like I would put these people who came up with the above idea in this group,

Then there are others who may have left them self and there families short to put a roof over there family head it was not an Investment it was a sacerfice Made by the whole family in lots of families there childern helped out at paying the mortage .I will leave it to others to explain better but i think you get my gest

Investments are some thing you do with spare cash and you do not look at it the same way. I myself are up near retirement so my pension pot is large in the years when we had the pension levy the government took more out than both myself and company put in each year meaning if i had a Defined benefit scheme which Lucky for me I don't have would mean there was nothing being added in these years the Government took it all and more it could yet affect people retiring in years to come again you put up with it.

Most family homes now with there morgage paid off paid up to 20% intrest each year in the eighties and nineties because of government policy at the time the paid away higher taxes ,any extra hours overtime would have a deduction of around 7.5 % prsi employee 7.5% employer and 60% tax at low incomes,

I hope no poster gets a kicking fit,

 

[jjm]

Should we not be looking at what is happening in Europe 27 this is where we need to look at

You see posters looking at is happening in the UK and USA I think we need to change direction and fast if we mess up again and there is a good chance it will be europe who will be deciding if we sink or swim .I am under the impression they will allow us to sink if we do not control how we spend our taxed (they were not in the same corner as the people who had there snouts in the trough all the time the are still watching by the reports the have issued they are not happy ) , When the came hear the first thing the insisted we do was reform how he spent taxpayers money. Once the left we went back to our old ways

We need to Question what are we going to use the new taxes for I suspect the advisory group are the same people who are allowing us to drift back to our old ways, chances are if the money is left with the family it will be better spent,

When we talk about USA and houses we are not talking about the same thing in the usa people who get into trouble paying for there family home can give back the keys and start again a year later.

IN ireland if you give back the keys you still owe the bank. As i already said there are people who in the past got help from family and friends so they could hold on to there home and not give back the keys buying a house in Ireland is a liability not an investment for most families

 

[odyssey06]

Aside - we really need to have the 'hand back the keys option' here.
It might knock some sense into banks before they give out loans.

 

[jjm]

Aside - we really need to have the 'hand back the keys option' here.
It might knock some sense into banks before they give out loans.

and the government who are tempting people with 20000Euro to take out loans with a very small deposit which means if something goes wrong they are toast it also means banks are correctly in my mind keeping a premium on rates to allow for some default by people tempted to over reach themselves before they are ready ,

 

[torblednam]

Our entire tax system is predicated on the basis of those who can afford to pay the most are taxed the most, and we have one of the most progressive tax systems in the world. But that doesn't mean that every new tax is immediately justifiable just because it is applied to higher levels of wealth.
Especially when (a) the state is already taxing this asset both via property tax and inheritance tax and (b) the tax is a profoundly unreliable source of revenue, which recent Irish history has shown to our cost.

I fully respect your entitlement to your opinion, but the fact that you view capping the value of an exemption as a new tax pretty much means there isn't really any more discussion that you and I can have on this topic, so this will be my last post in response to you as we're only repeating ourselves and I dare say boring other users.

Property tax applies regardless of whether a property is a PPR or not and regardless of whether there is a latent gain or not. It's a form of wealth tax, on the OWNERSHIP of property based on the value of the property. You could start off wealthy, and by choosing not to use your assets productively, end up seeing all of your wealth eroded away by a wealth tax. In other words, don't take it personally, it's not actually a tax on you at all, it's a tax on the property and you only have to pay it because you own the property. You can avoid the tax by not owning a property.

CGT is a tax on individuals (or companies) on their gains.

CAT is also a tax on individuals, on their good fortune. Worth noting there is a credit for CAT of the amount of any CGT paid arising on the transaction giving rise to the CAT liability.

So if Ultan and Saidhbh gift the family home in Foxrock worth 1.2m to Tarquin, they might owe €100k in CGT. Tarquin might owe €300k in CAT and be delighted that Daddy and Mummy will be effectively gifting him the house and paying €100k of his tax liability too...

As for the profound unreliability of the yield from CGT and similar, you should therefore approve of it being pitched at a rate that (by your rationale) has the effect of limiting the yield. Like a recovering addict taking measures to limit their exposure to the gargle... would you disapprove of a rate reduction to 20% which might see the tax take heading into the billions again? (That's a rhetorical question!)

 

[jjm]

I fully respect your entitlement to your opinion, but the fact that you view capping the value of an exemption as a new tax pretty much means there isn't really any more discussion that you and I can have on this topic, so this will be my last post in response to you as we're only repeating ourselves and I dare say boring other users.

Property tax applies regardless of whether a property is a PPR or not and regardless of whether there is a latent gain or not. It's a form of wealth tax, on the OWNERSHIP of property based on the value of the property. You could start off wealthy, and by choosing not to use your assets productively, end up seeing all of your wealth eroded away by a wealth tax. In other words, don't take it personally, it's not actually a tax on you at all, it's a tax on the property and you only have to pay it because you own the property. You can avoid the tax by not owning a property.

CGT is a tax on individuals (or companies) on their gains.

CAT is also a tax on individuals, on their good fortune. Worth noting there is a credit for CAT of the amount of any CGT paid arising on the transaction giving rise to the CAT liability.

So if Ultan and Saidhbh gift the family home in Foxrock worth 1.2m to Tarquin, they might owe €100k in CGT. Tarquin might owe €300k in CAT and be delighted that Daddy and Mummy will be effectively gifting him the house and paying €100k of his tax liability too...

As for the profound unreliability of the yield from CGT and similar, you should therefore approve of it being pitched at a rate that (by your rationale) has the effect of limiting the yield. Like a recovering addict taking measures to limit their exposure to the gargle... would you disapprove of a rate reduction to 20% which might see the tax take heading into the billions again? (That's a rhetorical question!)

They only good thing is the type of government who would bring in what is proposed above would turn on the same type of people who proposed /support it,

 

[Brendan Burgess]

Sorry folks

I have better things to do that review every post and every report of offensive posts on this thread.

Brendan