We'd also have to allow a lifetime carry forward of capital losses on homes.
I agree with you.
Should we have some CGT on the family home?
- Thread starter Brendan Burgess
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I disagree that this has changed in substantial enough a way, to need your fait accompli of 'need to change', no evidence. Ireland would still have good levels of social mobility for those who want it.
By upper end, I mean those with very large generational wealth. Not working families earning at whatever level and highly taxed, but utilising all their income across spending on normal life such as creches, transport, a home.
Annual taxes on retained wealth is one thing, progressively increasing charges on a single family home do not fall and should not fall in this bucket, this is why we have the PPR as a separate item.
We will likely disagree on the level of social engineering in a functional society. Taxes on vices such as cigarettes and alcohol are not the same as somewhere to live.
rustbucket
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Doesn’t cgt though in its current form automatically favour the wealthy?
What I mean is there is a difference between real wealth and notional wealth
Real wealth - buying for cash, selling at x
Notional wealth- buying with mortgage, selling for x.
CGT is calculated the same. Same amount due.
If CGT is is the same then the less wealthy person has a higher cost, same CGT and therefore less well off.
How would it treat financing cost or even indexation? If you bought your house for 200k 20 years ago that 200k is not worth the same today.
Not against CGT just curious how the above would be treated?
What I mean is there is a difference between real wealth and notional wealth
Real wealth - buying for cash, selling at x
Notional wealth- buying with mortgage, selling for x.
CGT is calculated the same. Same amount due.
If CGT is is the same then the less wealthy person has a higher cost, same CGT and therefore less well off.
How would it treat financing cost or even indexation? If you bought your house for 200k 20 years ago that 200k is not worth the same today.
Not against CGT just curious how the above would be treated?
Brendan Burgess
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I feel a pre-Budget submission coming on...
On death, capital gains disappear. So I am not going to trade down and face a CGT bill for doing so, when if I hold onto my home until I die, there will be no CGT.
So first of all, we would need to remove the CGT exemption on death.
If that is gone, there would be no disincentive to trade down.
We also need to reintroduce indexation so only real capital gains are taxed.
Brendan
On death, capital gains disappear. So I am not going to trade down and face a CGT bill for doing so, when if I hold onto my home until I die, there will be no CGT.
So first of all, we would need to remove the CGT exemption on death.
If that is gone, there would be no disincentive to trade down.
We also need to reintroduce indexation so only real capital gains are taxed.
Brendan
Between 1991 and 2022, house prices increased by 466%, whereas real wages increased by only 56%, indicating housing wealth vastly outpaced income growth. That increase in house prices happened due to an increase in capital in the economy.That's what wealth is.
Unless they want to buy a house.
Okay so the top 1% of the top 1%?
That's just using the taxation system to virtue signal. It has no meaningful return to the exchequer and doesn't create a more equal society for the other 99.99% of people. The problem is that most of the wealthy in Ireland don't accept that they are wealthy. They think that just because they choose to keep their wealth in an illiquid asset in the form of a family home.
Most wealth in Ireland is held in the form of a family home. Excluding such wealth from a wealth tax is just using the taxation system to virtue signal and has no meaningful return to the exchequer and doesn't create a more equal society.
The old line about middle class socialists springs to mind; they don't care about the poor, they just hate the rich.
I agree that they are not the same. Ensuring that younger people starting off in adult life have somewhere to live is far more important.
For me anyway, it looks like you have a hyperfocus on returns to the exchequer and homes equaling wealth, rather than the majority of the country earning, spending and living. Home buying and living doesnt happen in that narrow a vacuum, and my home value can go down as well as up- mostly thats a notional thing unless I want/need to move.
Living in your home and trying to trade up is not wealth, these are normal life/PPR.
I don't hate the rich or the poor, I simply think an over focus on taxing and retaxing an item which people have to live in, represents negative treatment for most of us (other than those for whom additional tax payments don't really matter).
Living in your home and trying to trade up is not wealth, these are normal life/PPR.
I don't hate the rich or the poor, I simply think an over focus on taxing and retaxing an item which people have to live in, represents negative treatment for most of us (other than those for whom additional tax payments don't really matter).
Robovac rider
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No.
We tax the earning and spending at a marginal rate of over 50%. We don't tax the retention of wealth at all. We hardly tax the transfer of wealth within families at all.
In my opinion that is unfair as I think we should aspire to a society where equality of opportunity is a core principle.
Nothing happens in a vacuum. If it goes down in value there is no tax liability.
The home has a value and the ownership of that is, by definition, wealth.
It's not a negative treatment for those who don't own a home or those who won't inherit a large amount of wealth.
Property tax reduce house prices relative to income. They are a positive for first time buyers.
This is insane. Most of these gains are simply inflationary. There is no gain in real terms. There are already provisions in the legislation to deal with development value of PPR gardens and such.
My house might be worth €400k now but it was worth IR£150k in 2002. I have gained nothing. I need somewhere to live.
Robovac rider
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But there should be allowance for capital losses in this situation.
This could have been very beneficial for some of the unfortunate people who bought homes before the last property price collapse and could not afford to sell.
They might have been able to sell if they had other disposable assets with taxable gains.
It could also be beneficial when the inevitable next property price collapse happens.
If PPRs are to be classed as wealth they should be subject to the same taxes and benefits as equities.
All maintenance costs related to the PPRs should be deducted before any gains are calculated. These should include mortgage interest, cleaning, insurance, electricity standing charges, security costs etc, since the ownership period began.
Brendan Burgess
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Yes, I did say that above.
That's not the way capital gains are calculated. Those items are allowable against corporation tax for a company or income tax for a sole trader, not CGT.
You have gained the net increase in the value of your home.
yellowmoose
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how would it work for owners who improve their properties increasing their value?
The same way it works now, or we could move to a site value based tax. That's probably fairer.
How much did it actually cost if it was bought with a mortgage?
£150,000 = €189,000
€189,000 in 2002 = €288,815 in 2026. (Inflation Calculator)
€400,000 - €288,815 = €111,185.
You have gained €111,185
If you had bought the same house in 1992 or 2012 you would have paid far less and so made far more.
It's a 3-bed end of terrace in a suburb of Dublin synonymous with the heroin trade. It has a little box room. The floor downstairs collapsed. There isn't a stitch of insulation.
I can't buy another house for the same money. The only relevant comparative indicator is house price inflation. Nothing else reflects the the fact that my purchasing power in the Dublin house market is unchanged, I have gained nothing.
Taxing people out of existence.
And what great public use is going to be made of the money? A bike shed. People are obsessed with widening the tax base, without any regard to the spending of these taxes.
Robovac rider
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Luckily the finance minister is more grey than purple.
For the first time in along time we have a Finance Minister more in tune with middle Ireland I think he is well able to handle Our Lady of Sorrows types who come running to him not to give a break to any sector they don't like or understand,
He knows well the Mother of Sorrows types would not be where the are today
but for the taxes paid my Middle Ireland in the past,
For most in Middle Ireland working in the private sector have only the contributory Pension along with there home,
There home in there Pension They Did Not Get A Tax Break To Provide For There Retirement Trough There Home,
Which was bought with after tax Income When taxes were away higher than the are now on Work/Labour
He knows well the Mother of Sorrows types would not be where the are today
but for the taxes paid my Middle Ireland in the past,
For most in Middle Ireland working in the private sector have only the contributory Pension along with there home,
There home in there Pension They Did Not Get A Tax Break To Provide For There Retirement Trough There Home,
Which was bought with after tax Income When taxes were away higher than the are now on Work/Labour
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