# Refund stamp duty to those in negative equity



## cully (6 Jan 2010)

Brendan,

Can i make another suggestion to aid those in negative equity:

Many of those in negative equity have paid large sums of stamp duty at the time of purchase. Given the probability of a new property based tax becoming a reality in the future, would it not be an idea that the government refund all stamp duty paid by those in negative equity only on condition the refunded sum is immediately put against the outstanding mortgage.
Not only would negative equity be reduced but also people would not face effective double taxation if the proposed new property tax on a house ignored previous large sums of stamp duty already paid on the same property.

I am cogniscant that the public finances may make this unrealistic and that ultimately people must be responsible for their actions, however i would like to know what people think of the above.


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## Brendan Burgess (6 Jan 2010)

Hi Cully 

An interesting idea and worth a thread on its own, so I have split it from the other thread.

The government got huge money from stamp duty. It simply could not refund the last three years' stamp duty.

I presume that the big negative equity problem is with first time buyers who did not pay stamp duty,so it wouldn't help them. Having said that, if it helps a few people, then it could be good. 

Could it do it selectively? Refund it only to those in negative equity? That would be very unfair to those who were responsible and chose not to trade up or who have since paid a big lump off their mortgage. 

The argument in favour of your proposal is that there will have to be some measure introduced when they bring in the property tax. I presume that the measure would not be a refund and that they would exempt recent buyers from property tax instead. 

They could allocate €50m to stamp duty refunds, and give it to the most deserving.


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## truthseeker (6 Jan 2010)

This will have no impact on first time buyers who didnt pay stamp duty, or on buyers who bought apartments or starter homes under the sq footage limit for stamp duty.

I would be interested in the statistics of who exactly is in negative equity, from personal experience (and this may be to do with my age and the ages of my friends and social circle), the people I see suffering around me with negative equity are first time buyers who had no previous equity built up (ie, were not selling somewhere to buy) and bought from early 2000s upwards. People who bought before that or were not first time buyers may have equity in their property even if its worth less than they paid for it at the time, ie they may not have needed a 92% mortgage or they may have paid off a number of years at this stage and have some equity built up.


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## canicemcavoy (6 Jan 2010)

Which part of "the country is completely broke and the IMF are at the door" do people not understand?


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## Setanta12 (6 Jan 2010)

Hmmm ... while I don't believe I'm yet in negaitve equity, I'm very sure I can find valuers who will certify that I am.

I'm all for this suggestion !


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## dereko1969 (6 Jan 2010)

mad idea, impossible to implement fairly and would reward many who didn't bother saving at the expense of those who had.


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## canicemcavoy (6 Jan 2010)

dereko1969 said:


> mad idea, impossible to implement fairly and would reward many who didn't bother saving at the expense of those who had.


 
I imagine many will see these as positive reasons to implement it.


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## bullworth (6 Jan 2010)

Insane idea similar to asking for a refund of the stamp duty I paid on bank shares and the taxes I paid during the last ten years.


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## Mpsox (6 Jan 2010)

There was suggestions last year that when the new property tax is introduced that people who had previously paid stamp duty over the last few years would be given some sort of credit against for a number of years. That at least would not require the state to pay out money

In addition, we should not get obsessed with negative equity. If you are not planning on moving house in the next few years(as most people won't), then it is irrelevant as it is only a paper figure.


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## jhegarty (6 Jan 2010)

Brendan said:


> They could allocate €50m to stamp duty refunds, and give it to the most deserving.



The most deserving , or the most reckless ?

I am already subsiding the banks that spent beyond their means, I don't fancy subsiding anyone with a better house than me.


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## Brendan Burgess (6 Jan 2010)

jhegarty said:


> The most deserving , or the most reckless ?
> 
> I am already subsiding the banks that spent beyond their means, I don't fancy subsiding anyone with a better house than me.



"most deserving" was a poor choice of words. The "most in need" might be  better.

We  are already subsidising people with Mortgage interest Supplement, tax relief, etc.

a further selective subsidy might keep people in their homes, and so relieve the taxpayer of the cost of rehousing them.


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## canicemcavoy (7 Jan 2010)

Brendan said:


> a further selective subsidy might keep people in their homes, and so relieve the taxpayer of the cost of rehousing them.


 
If someone loses their home because they got a mortgage they couldn't afford, but still at the end of the day has a relatively well-paid job, I presume they should just rent? If they're not in a well-paid job, then they should receive the same state aid that others in their position do. I cannot see why people who bought at the wrong time should be treated better than anyone else in the system.


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## Brendan Burgess (7 Jan 2010)

Hi Canice

You are quite right. If someone has a well-paid job, they are not getting housing assistance. But we are not really discussing these people.

There are many people out there who have the combination of high debt, negative equity and no or low salary. The state does help these people. In principle, I would prefer not to subsidise people, but if some form of subsidy or stamp duty refund or tax rebate, is less than the cost of rehousing them, I would opt for it as a practical solution.


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## bullworth (7 Jan 2010)

Brendan said:


> The state does help these people. In principle, I would prefer not to subsidise people, but if some form of subsidy or stamp duty refund or tax rebate, is less than the cost of rehousing them, I would opt for it as a practical solution.



How would we know that they would spend a rebate to pay off their mortgage  and not use it to buy a new car etc ? People with property already have gotten Nama to prop up prices. I would resent my taxes going to prop up the financial assets of any more people who gambled and lost.


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## canicemcavoy (7 Jan 2010)

bullworth said:


> How would we know that they would spend a rebate to pay off their mortgage and not use it to buy a new car etc ? People with property already have gotten Nama to prop up prices. I would resent my taxes going to prop up the financial assets of any more people who gambled and lost.


 
It's true to point out this would be a subsidy on top of an existing subsidy - NAMA's purpose being to establish, in Brian Lenihan's words, a "floor in the market" (http://www.gavinsblog.com/2009/09/11/a-floor-in-the-market/) for property owners.


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## asta (14 Jan 2010)

Brendan said:


> a further selective subsidy might keep people in their homes, and so relieve the taxpayer of the cost of rehousing them.


You seem to be confusing Negative Equity with Mortgage Default.
You can't loose your home just because you are in NE. You need to stop paying the mortgage


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## Mpsox (15 Jan 2010)

Brendan said:


> Hi Canice
> 
> You are quite right. If someone has a well-paid job, they are not getting housing assistance. But we are not really discussing these people.
> 
> There are many people out there who have the combination of high debt, negative equity and no or low salary. The state does help these people. In principle, I would prefer not to subsidise people, but if some form of subsidy or stamp duty refund or tax rebate, is less than the cost of rehousing them, I would opt for it as a practical solution.


 
What would happen in 10 years time if the property was no longer in negative equity and the owners hadn't sold it?. Would you expect people to refund the refund? We need to stop looking at property as a short term investment and start looking at it as a long term investment in a  home, not a short term speculation in a house. If you are meeting your mortgage payments and are not selling now or over the next few years, negative equity is irrelevant


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## canicemcavoy (15 Jan 2010)

> "What would happen in 10 years time if the property was no longer in negative equity and the owners hadn't sold it?."


 
Exactly. Such a scheme, even if was desirable (and it's not), is far too open to abuse.  I'll repeat this salient fact again that people seem to be ignoring in their rush to justify giveaways - the country has no money. 

As even Brendan has already said, such a scheme is designed to punish those who were responsible. In this country we have got to start rewarding those who act responsibly instead.


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## missdaisy (15 Jan 2010)

I have to agree with canicemcevoy and mpsox in this debate!


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## JR Rizzo (19 Jan 2010)

cully said:


> Brendan,
> Many of those in negative equity have paid large sums of stamp duty at the time of purchase. Given the probability of a new property based tax becoming a reality in the future, would it not be an idea that the government refund all stamp duty paid by those in negative equity only on condition the refunded sum is immediately put against the outstanding mortgage.



And what about all those who paid stamp duty and SOLD AT RIGHT TIME
to make profits (and pay more tax on these)??

And what about those who arent in negative equity (yet) cause they put a greater deposit down??

The property market is a MARKET
some people make money, some people lose money.

simple as that!

JR


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