Should HPI be taxed as Capital Gains

AndyGuil

MFW_ASAP wrote: »

Those aren't loopholes, that's exactly how capital gains works. If you don't make a profit then you don't pay tax on those profits. It's exactly the same as you don't pay income tax if you have no income.

Capital gains is already in existence for investment properties, it's just a case of extending it to all properties. The tax is paid on profit, so any costs in realising that profit (estate agent costs in selling previous home, legal costs in selling and buying would be taken off the profit).

Gains on a house would be exactly the same as gains on shares or other investments, why then should it be treated differently. Why shouldn't you be able to offset CGT losses in one investment against CGT gains in another investment?

I just find it fairer to tax profit than to apply punitive taxation just for buying a house (via stamp duty).

I know they are not, but they will be seen as ways to avoid the tax legimately. It would be a pointless tax as a result, far too easy to avoid.

theEnd

I'd rather see a land value tax (LVT).

Scrap council tax, stamp duty, CGT and even inheritance tax on houses. Pay somewhere between 0.5% and 1% per year, of the current value, as tax.

If you're older and don't have that cash, a charge can be made against the property, which is then taken when it's handed down.

MFW_ASAP

AndyGuil wrote: »

I know they are not, but they will be seen as ways to avoid the tax legimately. It would be a pointless tax as a result, far too easy to avoid.

As someone who has paid Capital gains tax on other investments, I can assure you it's not so easy to avoid! :eek:

However, it is fair that the tax is only applied to profits, so your point about being seen as a way to avoid the tax is moot. They are legitimate costs and so should be taken off any profit before tax is applied.

Generali

michaels wrote: »

Yes

But it should work like this:
Only gains above cpi should be taxed - otherwise it is taxing inflation.
Only funds withdrawn from the housing market should be taxed,so no tax is payable if moving to a house of the same or higher value
A 'tax credit' should be earned, refundable if repurchasing property so if moving out of an owned property, renting for 6 months and then purchasing again the tax paid could be refunded.
For pensioners the tax should be defer-able to death so they are not penalised if choosing to downsize.

Why is this fair? As a society to restrict the amount of land that can be built on. this hands a gain that should accrue to everyone to individuals who have property. Taxation is a way to share individual gains to society as a whole.

This sounds very complex to me.

Why not simply have a system where a property bought for the owner to live in doesn't attract CGT upon sale and all others do...?

MFW_ASAP

Generali wrote: »

This sounds very complex to me.

Why not simply have a system where a property bought for the owner to live in doesn't attract CGT upon sale and all others do...?

How do you then prevent runaway HPI booms (and busts)?

Generali

MFW_ASAP wrote: »

How do you then prevent runaway HPI booms (and busts)?

Build more houses.

Simples.

AndyGuil

MFW_ASAP wrote: »

As someone who has paid Capital gains tax on other investments, I can assure you it's not so easy to avoid! :eek:

For shares it is harder avoid. If you are buying a house and selling an old one, just like in shares if you sell and buy shares in a company within a very short period no CGT is paid because the price paid is maintained at the original purchase price of the first house. Only tax is paid if you downsize, i.e. money stays in your account after buying the new place.

MFW_ASAP

Generali wrote: »

Build more houses.

Simples.

Where does the money come from to build these houses at a price people can afford?

MFW_ASAP

AndyGuil wrote: »

For shares it is harder avoid. If you are buying a house and selling an old one, just like in shares if you sell and buy shares in a company within a very short period no CGT is paid because the price paid is maintained at the original purchase price of the first house. Only tax is paid if you downsize, i.e. money stays in your account after buying the new place.

So if you sell an investment property and use the profits to buy a different property, you are not liable for capital gains? That's interesting - do you have a link to these rules?

It'd be another tick in a box for my BTL investment criteria if this is the case.

CLAPTON

MFW_ASAP wrote: »

Where does the money come from to build these houses at a price people can afford?

the money comes from ordinary people borrowing from banks (mortgages)

the price of most properties in the SE is significantly determined by the price of land with planning permission and government taxes / levies


the solution is to free up more land for building and to reduce taxes on new builds