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Grave Robber Joan (Is her budget comment on robbing "property tax" from the dead the worst ever?)

ShoutingIsLeadership

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Jan 17, 2011
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49,728
But if the house were sold, would it not generate cash? Is that not a good example of a store of wealth - something that can be exchanged for cash?
If one sells one's house, one has to find somewhere else to live; presumably using the proceeds of the sale. Therefore, it is not a store of wealth.
 


ShoutingIsLeadership

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Yet more hysteria and ill-informed rubbish.

Here's the thing - a country is its people. The country is going bankrupt and therefore the country - i.e. the people - need to spend less and raise more in revenue.

They do that through a Government. The country had the chance to elect a Government that would cut all obligations associated with a bailout and which would give us total freedom to raise and spend what we like but without the bailout funds. The country decided against that because doing so would increase our freedom to be bankrupt and nothing else. But like it or not, the people made a choice to elect a Government that would stick with the bailout package and which would seek to renegotiate that package, both of which it has done.

But people need to learn that the days of Bertie are over - there is no pot of gold at the end of the rainbow and there never was. If you want schools and teachers and hospitals and roads, they need to be paid for. If you think you can do a better job managing the national finances, run for election or support a candidate who you believe can do a better job, or join a party and shape its policies to those that you prefer. But services need to be paid for. And that comes through a tax.

A tax on a house is not unusual, nor is it unfair. There are tens and hundreds of thousands who cannot get the security of their own home; a property tax simply asks that those who do own their own home - a very substantial asset - should contribute to tax revenue in a way that reflects not just their income but also their assets. And like it or not, for all its sentimental value, a home is also an asset.

That being the case, there is an obvious problem of those who are asset rich and cash poor - those who might have bought a house during the boom but are now unemployed, or those who bought their house for a modest some decades ago but are now retired when it is substantially higher in value. Of course any tax on assets needs to be flexible enough that it does not hit those who are wealthy on paper but not in practice.

But that does not mean that the tax liability should not arise - simply that the means of collection should be flexible enough to reflect those whose asset liquidity is not such as to allow them to pay immediately. Fixing the tax to the asset as a condition of probate is one very sensible way to do that.

Why? Because you do so in a way that doesn't affect the taxpayer themselves, because obviously they will not be around to experience any hardship as a result of the tax. Secondly, those who would inherit the home aren't any worse off - inheriting a home valued at €200k might be better than inheriting a home worth €200k with €20k of property tax affixed, but regardless, the inheritor is still €180k better off than they were, so not a tremendous imposition.

Effectively this is the same situation with any debt that an older person incurs but cannot pay - it will attach to their estate and probate will have to clear the hurdle of paying the debt before settling probate.

Now the choice is that we can maintain the pretence that we expect old people to pay a tax that they cannot, have them live in fear because they can't pay their tax and then have that debt taken from their estate when they die, as any other debt would be. Or we can formalise the situation, create a specific scheme whereby older people will not be asked to pay the tax upfront and will have the security and comfort of knowing that they are not in default, and the tax is simply paid from their estate.

The outcome is the same. The only difference is that formalising it means fewer scared and worried old people waiting for a knock on the door.
You used the words, 'a very substantial asset'.

My home is worth half what I paid for it (using a mortgage). That doesn't included the few hundred grand interest that will need to be paid.

Please explain how this is an asset.

Then please explain how this is fair.
 

culmore

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Jun 14, 2010
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3,169
not a great fan of joan but have to agree with her on this one, if people wont pay their taxes in this life it should be taken out of their estate when they are gone, and if that happens it will be about four times more with interest and fines and most of all solicitors fees, so saving a few euro while living will cost their family a fortune after they are gone.
 

ivnryn

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May 20, 2007
Messages
1,303
Burtons proposal takes pressure off older people whose primary assett is their house.

It makes complete sense.
Right, if you are going to levy a house tax, then that is a perfectly reasonable way to do it. Add a liens on the house. The person either pays the tax annually or when it next changes hands (with some kind of nominal interest).

Bear in mind, that the alternative would be that they don't pay it at all. It's not like the government would kick them out of their houses.

For this tax to be even remotely fair, there needs to be absolutely minimum exemptions.
 

cashinhand

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Dec 13, 2007
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916
Deferring payment of the tax until the house is sold or transferred makes good sense.

I would prefer to see some kind of site value tax though, as a straight property tax disincentivises adding to the value of one's house through extension, upgrading insulation, converting the attic etc.: this is not good for the economy or the country's housing stock!

A good outline of the arguments for not slavishly following other models is made by Ronan Lyons here.
 

ivnryn

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No. A store of wealth is when something is specifically purchased in order to act as a safe place for one's wealth.
Obviously, it is a store of wealth. That is where the advice "buy the most expensive house you can afford" came from.

Transactional taxes like stamp duty also encourages people to buy larger houses than they need.
 

Pudna

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Jan 26, 2011
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1,918
Deferring payment of the tax until the house is sold or transferred makes good sense.

I would prefer to see some kind of site value tax though, as a straight property tax disincentivises adding to the value of one's house through extension, upgrading insulation, converting the attic etc.: this is not good for the economy or the country's housing stock!

A good outline of the arguments for not slavishly following other models is made by Ronan Lyons here.
What if the house is not sold, as another family member is already living there?
 

ShoutingIsLeadership

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Jan 17, 2011
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Obviously, it is a store of wealth. That is where the advice "buy the most expensive house you can afford" came from.

Transactional taxes like stamp duty also encourages people to buy larger houses than they need.
How does stamp duty encourage people to buy a bigger house than they need?
 

potholedogger

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Oct 17, 2012
Messages
1,202
Deferring payment of the tax until the house is sold or transferred makes good sense.

I would prefer to see some kind of site value tax though, as a straight property tax disincentivises adding to the value of one's house through extension, upgrading insulation, converting the attic etc.: this is not good for the economy or the country's housing stock!

A good outline of the arguments for not slavishly following other models is made by Ronan Lyons here.
Many of the expensive houses are built on valuable sites where in many cases the cost of building the Home is only 20% of the value of the house. At the bottom end of the market the site has a negligible value or a negative value where negative equity is involved.

In practice the current proposals embody a site valuation tax.
 

EUrJokingMeRight

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Joined
Sep 28, 2009
Messages
11,664
Yet more hysteria and ill-informed rubbish.

Here's the thing - a country is its people. The country is going bankrupt and therefore the country - i.e. the people - need to spend less and raise more in revenue.

They do that through a Government. The country had the chance to elect a Government that would cut all obligations associated with a bailout and which would give us total freedom to raise and spend what we like but without the bailout funds. The country decided against that because doing so would increase our freedom to be bankrupt and nothing else. But like it or not, the people made a choice to elect a Government that would stick with the bailout package and which would seek to renegotiate that package, both of which it has done.

But people need to learn that the days of Bertie are over - there is no pot of gold at the end of the rainbow and there never was. If you want schools and teachers and hospitals and roads, they need to be paid for. If you think you can do a better job managing the national finances, run for election or support a candidate who you believe can do a better job, or join a party and shape its policies to those that you prefer. But services need to be paid for. And that comes through a tax.

A tax on a house is not unusual, nor is it unfair. There are tens and hundreds of thousands who cannot get the security of their own home; a property tax simply asks that those who do own their own home - a very substantial asset - should contribute to tax revenue in a way that reflects not just their income but also their assets. And like it or not, for all its sentimental value, a home is also an asset.

That being the case, there is an obvious problem of those who are asset rich and cash poor - those who might have bought a house during the boom but are now unemployed, or those who bought their house for a modest some decades ago but are now retired when it is substantially higher in value. Of course any tax on assets needs to be flexible enough that it does not hit those who are wealthy on paper but not in practice.

But that does not mean that the tax liability should not arise - simply that the means of collection should be flexible enough to reflect those whose asset liquidity is not such as to allow them to pay immediately. Fixing the tax to the asset as a condition of probate is one very sensible way to do that.

Why? Because you do so in a way that doesn't affect the taxpayer themselves, because obviously they will not be around to experience any hardship as a result of the tax. Secondly, those who would inherit the home aren't any worse off - inheriting a home valued at €200k might be better than inheriting a home worth €200k with €20k of property tax affixed, but regardless, the inheritor is still €180k better off than they were, so not a tremendous imposition.

Effectively this is the same situation with any debt that an older person incurs but cannot pay - it will attach to their estate and probate will have to clear the hurdle of paying the debt before settling probate.

Now the choice is that we can maintain the pretence that we expect old people to pay a tax that they cannot, have them live in fear because they can't pay their tax and then have that debt taken from their estate when they die, as any other debt would be. Or we can formalise the situation, create a specific scheme whereby older people will not be asked to pay the tax upfront and will have the security and comfort of knowing that they are not in default, and the tax is simply paid from their estate.

The outcome is the same. The only difference is that formalising it means fewer scared and worried old people waiting for a knock on the door.
A home is not an asset in the true sense. Only in a rising property market where it is appreciating in value and when it is planned to be sold for a higher price than you paid for it, including all the associated costs is it an asset.

Something that takes money OUT of your pocket is not an asset.
 

mflynn2

Member
Joined
Apr 28, 2008
Messages
78
Is this OP the most over the top ever?

This is a reasonable proposal to reassure elderly people. The family home is real estate property, and the inheritors gain advantage from it, even if there are some charges on it.
 

cashinhand

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Joined
Dec 13, 2007
Messages
916
Many of the expensive houses are built on valuable sites where in many cases the cost of building the Home is only 20% of the value of the house. At the bottom end of the market the site has a negligible value or a negative value where negative equity is involved.

In practice the current proposals embody a site valuation tax.
Let us say a house is now standing on a site where the site value is 80% of the overall market price today (20% covers the buildings etc. standing on the site). The owner decides to put in triple-glazed windows, covert the attic, add a conservatory and upgrade the insulation to bring the house's energy rating up to B-standard. Now the percentage covering the non-site will have increased.

By taxing the whole shebang (site and buildings), you are basically taxing this employment-generating activity of upgrading a house; and encouraging people to leave their houses as is for fear of increasing the tax on it.

So no, it doesn't embody a site valuation tax. Read the Ronan Lyons stuff I've linked to, and see what you think.
 

cashinhand

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Dec 13, 2007
Messages
916
What if the house is not sold, as another family member is already living there?
I don't see why the taxes couldn't still not be rolled up for future payment. This kind of detail would have to be worked out, based on whether title has changed hands, etc. Essentially the government is still gaining collateral even if the tax is not immediately paid.
 

DT123

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Aug 31, 2011
Messages
14,145
On the other hand,public sector pensions and welfare benefits could be reduced to whatever level the State can afford and people who have worked for,bought and paid for their OWN property,could be left in peace to do with it as they will.
 

cashinhand

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Dec 13, 2007
Messages
916
Not the most over the top ever, but suitable for the zoo nevertheless.
It's a shame the OP went too far out to make its point, as the questions underlying are valid, even if there are workable solutions.
 

Howya

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Joined
Feb 29, 2012
Messages
1,681
No. A store of wealth is when something is specifically purchased in order to act as a safe place for one's wealth.

A home, especially where purchased with a mortgage, is a home. An investment property could be considered a store of wealth.
Fair enough but if people didn't think that they could sell their house at some point in the future for at least what they paid for it, then surely most people would rent instead? If the house depreciated over time then not many people would buy one. Historically over long periods of time house prices do rise so even if not the primary reason to buy, houses do become a store of wealth.
 

elliebee

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Joined
Oct 23, 2011
Messages
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I don't see why the taxes couldn't still not be rolled up for future payment. This kind of detail would have to be worked out, based on whether title has changed hands, etc. Essentially the government is still gaining collateral even if the tax is not immediately paid.
But will the interest be clocking up year on year? If so, the home might as well be willed to the government!!
 


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