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

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odyssey06 said:
Surely this puts at risk more FG votes than it could ever hopes to deliver. Its not even clever politics. I can see this working very well on the doorstep... for all the other parties.

Would the last FG voter turn out the light?
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You might be right.

But leaving politics aside, is it a good idea to limit the CGT exemption on family homes?

Brendan
 
odyssey06 said:
Surely this puts at risk more FG votes than it could ever hopes to deliver. Its not even clever politics.
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There are more votes to be got from reversing the changes .What is left of the old FG voters the will still Vote FG .The only place FG will pick up votes is stealing the addits from FF and Labour each is worth 2 votes one more for FG one Less For FF or LABOUR,they need to hold on to any labour votes who changed to FG last time to stay ahead of FF,
 
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Brendan Burgess said:
You might be right.
But leaving politics aside, is it a good idea to limit the CGT exemption on family homes?
Brendan
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Across the board and without any re-balancing of CGT rates to favour investments ... no. I think it's bad politics and bad economics (which is why the IMF favoured property tax over stamp duty).

I think it would be better to link CGT exemption with participation in government scheme e.g. first time buyers grant or more preferably mortgage interest relief going forwards ... If you signed up to the scheme, the government now have a vested interest in the property and if the asset rises in value and you dispose of it, assuming you have made a gain, you pay back the value of the assistance.
But the ship may have sailed on that.

Or, flying a kite here so may not have thought it through... you get a CGT exempted value for use against either property or investments or some combination of them?

Alternatively, a limit of the number of CGT PPR exemptions transactions e.g. 1 every X years or X per lifetime would be ok. If there is a concern that people are flipping houses that should be tailored to catch them.
 
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Brendan Burgess said:
You might be right.

But leaving politics aside, is it a good idea to limit the CGT exemption on family homes?

Brendan
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You would need to have a debate on what is is going to be spent on to know if it is going to be a good idea.I expect some pressure group will rob all and sign up to get it every year from then on better left where it is ,We could finish up driving up the cost of living on everyone including the addits,
 
And while we are all discussing and agreeing about CGT on family homes, they will sneak another tax rise through without anyone noticing - unless it's another float a balloon and let's see what happens
 
odyssey06 said:
Wasn't one of the IMF inspired rationales for bringing in property tax and removing the likes of stamp duty was to replace a fluctuating revenue source with a stable, annualised one? Do we want the government to get addicted to tax from property sales again? That ended so well the last time.

We have a property tax. It is based on the value of the property. It is more stable than CGT. Let's rely on it.
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That rationale would suggest residential investment properties shouldn't be subject to CGT.
 
jpd said:
And while we are all discussing and agreeing about CGT on family homes, they will sneak another tax rise through without anyone noticing - unless it's another float a balloon and let's see what happens
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I have a feeling this is going to keep popping up, already addressed:

Protocol said:
No politician has suggested this.

It was one of many suggestions in a civil service TSG document.

http://www.finance.gov.ie/what-we-do/tax-policy/tax-strategy-group
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torblednam said:
That rationale would suggest residential investment properties shouldn't be subject to CGT.
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At the time I think 75% of properites were owner occupied so volume is relevant here ... If the situation was reversed and the state become reliant on the CGT sales of an investment property market of 75% then there would be a danger of history repeating itself if the state expands its expenditure based on these kind of 'windfall' unpredictable gains... and then the gains dry up.

The below is an excerpt from an DoF document justifying the introduction of property tax... maybe it's the same group now flying a kite for CGT on PPRs... if so, it begs the question were they talking nonsense then or now... possibly they were stone cold scared sober then and are now craving the old hit once again.

From the Department of Finance Tax Strategy Group:

"An annual property tax provides a reliable and sustainable source of revenue as compared to the transaction taxes on property which characterised Ireland’s recent approach to property taxation. Stamp Duty on property transactions, which is dependent on transaction levels and values, is particularly subject to fluctuations, especially in times of buoyant property prices and markets which characterised the
2003 to 2007 period. Capital Gains Tax and Capital Acquisitions Tax which involve taxing the appreciation of an asset on sale or inheritance are also subject to fluctuations closely related to changes in asset values and the level of transactions in the property market. From 1998 onwards the strong relationship between economic growth and the resultant increase in the taxation yield from property transfers and rising asset values led to an over-reliance on this source of revenue. This over-reliance has led, in turn, to serious difficulties for the Exchequer in the context of the decline in economic activity which particularly impacted on the property market in recent years with an associated sharp decrease in property transfers and values."

Mark Barrett (President, Irish Tax Institute): "We paid the price for being exposed in relation to Capital Gains Tax, Stamp Duty and Transaction Taxes."
[broken link removed]
 
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odyssey06 said:
At the time I think 75% of properites were owner occupied so volume is relevant here ... If the situation was reversed and the state become reliant on the CGT sales of an investment property market of 75% then there would be a danger of history repeating itself if the state expands its expenditure based on these kind of 'windfall' unpredictable gains... and then the gains dry up.

The below is an excerpt from an DoF document justifying the introduction of property tax... maybe it's the same group now flying a kite for CGT on PPRs... if so, it begs the question were they talking nonsense then or now...

From the Department of Finance Tax Strategy Group:

"An annual property tax provides a reliable and sustainable source of revenue as compared to the transaction taxes on property which characterised Ireland’s recent approach to property taxation. Stamp Duty on property transactions, which is dependent on transaction levels and values, is particularly subject to fluctuations, especially in times of buoyant property prices and markets which characterised the
2003 to 2007 period. Capital Gains Tax and Capital Acquisitions Tax which involve taxing the appreciation of an asset on sale or inheritance are also subject to fluctuations closely related to changes in asset values and the level of transactions in the property market. From 1998 onwards the strong relationship between economic growth and the resultant increase in the taxation yield from property transfers and rising asset values led to an over-reliance on this source of revenue. This over-reliance has led, in turn, to serious difficulties for the Exchequer in the context of the decline in economic activity which particularly impacted on the property market in recent years with an associated sharp decrease in property transfers and values."

Mark Barrett (President, Irish Tax Institute): "We paid the price for being exposed in relation to Capital Gains Tax, Stamp Duty and Transaction Taxes."
[broken link removed]
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Broadening the tax base means exactly that though. Withdrawing an exemption broadens the tax base. You're arguing against yourself there.

Edit:
By way of illustration, I looked at the 2007 exchequer receipts, and they contained 3.2bn from stamp duty, and 3.1bn from CGT, making up between them about 13/14% of the tax take.

The 2017 profiles for CGT, stamp duty and LPT total an expected 1.6bn, or 3.2% of the tax take.
 
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torblednam said:
Broadening the tax base means exactly that though. Withdrawing an exemption broadens the tax base. You're arguing against yourself there.
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I could make a bridge broader, but if it means the weight is borne by an unreliable component, it doesn't seem like a wise plan to me.
Seems like one of the worst things you can do is allow an Irish government to get used to spending the income from a recurring source "particularly subject to fluctuations."
 
torblednam said:
By way of illustration, I looked at the 2007 exchequer receipts, and they contained 3.2bn from stamp duty, and 3.1bn from CGT, making up between them about 13/14% of the tax take. The 2017 profiles for CGT, stamp duty and LPT total an expected 1.6bn, or 3.2% of the tax take.
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So CGT alone in 2007 was €3.1 billion? And today it's approximately €1 billion (if we assume the other taxes cover the balance).
We had the same exemptions in 2007 vis a vis 2017?

Maybe the Tax Strategy Group should look at the collapse of CGT gathered under its existing net, before attempting to catch more with it ... Seems like CGT is a decidedly unreliable basis for supporting government spending; and worse, at its present levels it is acting a disincentive to investment?
 
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Losses are still one of the biggest drivers of the low CGT yield...so too is the high rate.

Cut the rate to 20% and apply Entrepreneur Relief to €10m and watch the tax take jump...
 
:)
torblednam said:
Keep up jj, the sacred cow isn't being milked at all... ;)
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looks like the only one allowed to suck her is her own calf,:):)she will be milked all right she is careful about who gets the milk

They days are long gone when some lucky calves had two mothers,
 
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torblednam said:
I can understand an objection to taxing PPR disposals, on the basis that it might have an adverse effect on the property market and exacerbate a housing crisis - I'd like to see that objection fleshed out however, as the specific events (or decisions) that would have this effect are not clear to me.
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I'll have a shot at it.

The argument goes that CGT is economically inefficient because it creates a "lock-in" effect, in the sense that it discourages the liquidation of an asset that has appreciated in value. In the context of this discussion, removing or capping the current PPR exemption might be expected to discourage homeowners from downsizing to accommodation that is more suitable to their needs, moving house to take up a job opportunity, etc.

I happen to think that this argument has some merit, which is why I don't think it would be a good idea to simply repeal the current exemption as opposed to capping the level of gains that can be exempted at a reasonable level (and I don't have a strong view as to what might constitute a reasonable level in this context).

I'm afraid I really don't understand the argument that removing or capping the PPR exemption would have any impact on the supply of housing (aka the housing crisis). Nor do I understand the argument that the current exemption should remain untouched as a matter of principle.
 
Sarenco said:
I'll have a shot at it.

Nor do I understand the argument that the current exemption should remain untouched as a matter of principle.
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People don't trust the government or the people proposing these changes there is an expectation that any CGT collected will be use to feather there own nest.They would be better off seeing how they can reform and get more value for the taxes already collected before collecting new taxes to flush down the swanee,

the last new major new tax to be collected is being posted back to the taxpayers because the could not convince the people who paid that it would be collected from everyone who had to pay and would be well spent well,they were not able to do the job the have and collect the last new tax,
 
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Understood Jim but this isn't a Government proposal. It's just an option raised by an advisory body.

I find it interesting that people seem to object more to the imposition of new taxes (or capping current exemptions) than they object to increased rates charged under existing tax heads. Maybe that explains why it is practically impossible to generate any meaningful discussion as to what would constitute fair taxation - the arguments in favour of maintaining the status quo always seem to prevail.

We even have the bizarre situation where our hard left politicians object to property tax! Is it a post-colonial thing?
 
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