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A tax-efficient alternative to pensions?

kidmugsy
Posts: 12,709 Forumite


Keep, or restart, your mortgage until age 99.
https://www.theguardian.com/money/2018/may/19/mortgage-99-years-old-aldermore-bank-mature-borrowers-home-loan-later-life
You get to exploit the absurdly favourable tax regime for owner-occupied housing for much of your life then you use your house to help fund your old age.
That tax deal: No income tax on the imputed rent (Conservative government). No capital gains tax (Labour government). Favoured treatment for inheritance tax (Coalition government). Property tax levels much lower than in (for example) many parts of the US (all governments).
Plus no new building at a rate that could threaten your property values (all governments).
https://www.theguardian.com/money/2018/may/19/mortgage-99-years-old-aldermore-bank-mature-borrowers-home-loan-later-life
You get to exploit the absurdly favourable tax regime for owner-occupied housing for much of your life then you use your house to help fund your old age.
That tax deal: No income tax on the imputed rent (Conservative government). No capital gains tax (Labour government). Favoured treatment for inheritance tax (Coalition government). Property tax levels much lower than in (for example) many parts of the US (all governments).
Plus no new building at a rate that could threaten your property values (all governments).
Free the dunston one next time too.
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Comments
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Keep, or restart, your mortgage until age 99.
https://www.theguardian.com/money/2018/may/19/mortgage-99-years-old-aldermore-bank-mature-borrowers-home-loan-later-life
You get to exploit the absurdly favourable tax regime for owner-occupied housing for much of your life then you use your house to help fund your old age.That tax deal: No income tax on the imputed rent (Conservative government).
Do you pay tax on your car based on what you'd get if you rented it out? On your furniture? On your TV? On your PC? On your clothes? On your pension/ISA? Etc etc.
You don't pay tax on "imputed rent" on anything you own. Housing is treated exactly the same as everything else you own in this respect.No capital gains tax (Labour government).
But pensions and ISAs have exactly the same favourable treatment.Favoured treatment for inheritance tax (Coalition government).Property tax levels much lower than in (for example) many parts of the US (all governments).Plus no new building at a rate that could threaten your property values (all governments).
Overall - pensions and ISAs have far more favourable tax treatment than housing.0 -
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It's favourable because for many years there was income tax to pay on imputed rent and then the 1963 budget eliminated it.
It's a bit like saying the law is now favourable to gay people, just because it was unfavourable to them in the past.0 -
From the comments:
I find this sort of age discrimination absolutely sickening.
My son, who is 101, will never get on the housing ladder at this rate.Conjugating the verb 'to be":
-o I am humble -o You are attention seeking -o She is Nadine Dorries0 -
Taxing the imputed rent on houses is a rational way of equalising the treatment of renters and owner-occupiers. The rent charged is partly a function of the landlord being taxed on the rents he receives; taxing the imputed rent evens things up, albeit roughly. That's rational since it's no business of the government to favour the one sort of housing tenure over the other.
I suspect the reason for abolition was simple vote-buying. Maybe it made some sense in an era when a huge number of tenants were in council housing, so that they were subsidised as an exercise in vote-buying by the other side of politics. But nowadays it makes much less sense.
So, bring back income tax on the imputed rent. Apply capital gains tax to owner-occupied housing (after index-linking, of course - the only rational way to have a CGT system). Soon the housing market would readjust and young people could afford housing again - though of course their demand for buying houses would slacken when they saw that all the tax favouritism had been removed. After all, when they attempt to wring our heartstrings with tales of their inability to get "on the housing ladder" they are really just complaining that they can't get their snouts in the trough too.Free the dunston one next time too.0 -
Taxing the imputed rent on houses is a rational way of equalising the treatment of renters and owner-occupiers. The rent charged is partly a function of the landlord being taxed on the rents he receives; taxing the imputed rent evens things up, albeit roughly.That's rational since it's no business of the government to favour the one sort of housing tenure over the other.I suspect the reason for abolition was simple vote-buying. Maybe it made some sense in an era when a huge number of tenants were in council housing, so that they were subsidised as an exercise in vote-buying by the other side of politics. But nowadays it makes much less sense.So, bring back income tax on the imputed rent. Apply capital gains tax to owner-occupied housing (after index-linking, of course - the only rational way to have a CGT system).
Roll-forwards doesn't avoid the tax, it just delays it, so can't see any reason not to allow it.Soon the housing market would readjust and young people could afford housing again - though of course their demand for buying houses would slacken when they saw that all the tax favouritism had been removed.After all, when they attempt to wring our heartstrings with tales of their inability to get "on the housing ladder" they are really just complaining that they can't get their snouts in the trough too.
Personally I'd be in favour of higher taxing on housing, to reduce the investment led demand in the market so demand comes more from those who need accomodation rather than those who want to make money.
But the original premise of this thread, that housing is a "tax efficient alternative to a pension", is frankly rubbish. But I wouldn't mind it if it became even more rubbish...so people finally get the message.0 -
YThe supply of properties has increased must faster than the population. But the number of people per property has gone down, however this trend won't continue for ever.
The trend has already reversed.
https://medium.com/@ian.mulheirn/why-is-household-size-growing-c662cae5a69b
Note that there two markets for housing. One forr a place to live in - where the price is shown by the levels of rents . There affordability has been improving. Then thee is the market in houses as an asset, where more money id available for those who can get mortgages due to the low interest rates, but high LTV mortgages are harder to get Making it cost more to own a house would just make mortgages less affordable and keep such people out of the market.
https://medium.com/@ian.mulheirn/two-housing-crisis-87a843a9d09b0 -
Surely not an alternative to pension income. It might help people who have made poor provision for their housing costs in later life, but I like to keep things simple and if you can avoid being in debt it's usually a good thing for you and eventually your heirs.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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