# SD - Propsed Chages for FTB inequitable



## peno (24 Oct 2006)

Listening to the radio this morning I wonder do all these experts have any opinion of there own and actually think about a suggestion or are they all sheep who follow what seems like a great suggestion. 

  My problem is with the current movement to remove stamp duty for first time buyers up to a certain threshold. While I fully agree that stamp duty as it currently stands is a crime and should be restructured I fear that removing it for first time buyers *only* will widen the social class divide.  My preference would be for stamp duty to be removed for all buyers up to a certain threshold provided the house purchased is for their residential purposes and they pay stamp duty on the current house if they decide to hang on to that. Possibly also having stamp duty only payable for house above the threshold for that amount is above the threshold.

  Take for istance a young couple who bought a house in an area that is seen as “disadvantaged” with a lower price range. Now they want to move out into a “nicer” area but they are prevented from doing that because they have to pay stamp duty on a house that a first time buyer will not have to pay tax on. This to me is inequitable. Why should a person who can afford 450K or whatever the new threshold for a first time house be treated so more favourably than a family trying to improve their situation?? I’ve yet to hear any of our politicians or housing experts making this point.

  Am I alone with this thought??


----------



## baby_tooth (24 Oct 2006)

peno said:


> Listening to the radio this morning I wonder do all these experts have any opinion of there own and actually think about a suggestion or are they all sheep who follow what seems like a great suggestion.
> 
> My problem is with the current movement to remove stamp duty for first time buyers up to a certain threshold. While I fully agree that stamp duty as it currently stands is a crime and should be restructured I fear that removing it for first time buyers *only* will widen the social class divide. My preference would be for stamp duty to be removed for all buyers up to a certain threshold provided the house purchased is for their residential purposes and they pay stamp duty on the current house if they decide to hang on to that. Possibly also having stamp duty only payable for house above the threshold for that amount is above the threshold.
> 
> ...


 
in total agreement, any tax or imposition on a market casues distortions.
i'm not sure if this would be constitutional, especially if you consider that alot of single ppl have bought a "one" person apartment, and then meet a partner who hasn't, if they decide to buy a house together, then they are both classified as non ftb, which would go against the ethoes that the family is the main unit of our society, as this could be constued as an impediment to setting up a family.

and what about vrt!!


----------



## Stiofan (24 Oct 2006)

While I am in total agreement on how unequitable SD is in principle I think a change in line with that touted by politicians would be do more harm than good at the moment. When a tax based cost such as SD is attributable to a certain price it becomes a constant factor in price determination, ie, it represents x% of the market price. Fairly simple assumption until you take into account that it is not subject to market dynamics, demand and supply and although the actual amount of the tax will adjust in conjunction with market value it will still remain a constant cost to a potential buyer. Take for example a house worth 400,000 with 6% SD bringing it up to 424,000. The true market price is 424,000 as this reflects the full cost to the buyer and more importantly represents what they can afford.

Now look at what would happen to the 400k house if SD was reduced or abolished. The affordabilty remains the same at 424k so presuming that the market is efficent the price will return to the initial cost before the move on SD, 424k. This represents an artificial stimulation of the market which in turn could lead to a further price spirral as some buyers in the market mistake the jump as a potential capital gain.

Now I know some people might argue that its a big presumption to consider the market efficent in Ireland but when you look at the role of the EA in the process and their commission driven goal to make every house purchase more expensive than the next its likely that the price increase would happen quite quickly.

In summary any change to SD in my opinion will have a nil effect on affordability and serve only to stimulate an overpriced market. It doesn't take a genius to figure out who would benefit more from the change either, and would be of no surprise to me if they were the same people lobbying for such a change!!!


----------



## MugsGame (24 Oct 2006)

The only change that should be made to Stamp Duty is that the bands should be tiered, so that crossing a magic threshold does not result in the total stamp duty rate doubling. For example, the first €200,000 could be stamped at 4% and the next €200,000 at 8%.

Any reduction to "help" FTBs will have little or no effect, since the total purchase cost (price + stamp duty) will remain the same.

There might be some merit in replacing stamp duty with an annual residential property tax (including sites zoned for residential use!). This would support the market in the short term, and in the long term would discourage speculation, increase supply, and lower transaction costs. Unfortunately I can see this being difficult to implement, for political and practical reasons.


----------

