Ronan Lyons:" Imposing CGT on housing makes it cheaper"

[Brendan Burgess]

https://twitter.com/ronanlyons/status/1374300025086443524

Here's one of those papers that puts numbers on what makes sense, using a tax change in Seoul in 2006: implementing capital gains tax on housing makes it cheaper. If owner-occupied housing is uniquely tax-privileged, it will of course become expensive.

 

[NoRegretsCoyote]

It's true. You can see this in yields.

4-bed houses in Dublin 4 (mainly owner occupied) yield about 4%
2-bed apartments in Limerick (mainly BTLs) yield about 10%

BTLs are subject to CGT and tax on profits. Owner-occupied houses aren't. Of course BTLs are going to be cheaper.

 

[Purple]

Imposing a higher rate of property tax on owner occupier property will also make it cheaper (and make the taxation system more equitable) but it isn't going to happen either.

 

[noproblem]

Maybe the Goverment will look at imposing a tax on principal private residences when sold. I suspect some are using the no tax on this asset as a means of accumulating wealth by buying and selling quite a few times.

 

[NoRegretsCoyote]

I suspect some are using the no tax on this asset as a means of accumulating wealth by buying and selling quite a few times.

Am not convinced. It probably encourages people to be a bit over-housed, relative to their needs, all else equal.

But LPT on a €1m house for someone on a low income is a material cost and is already an incentive to downsize.

Also, CGT on PPRs would just encourage people to hold on to the asset until death so that only CAT is chargeable to their heirs.

 

[Brendan Burgess]

Also, CGT on PPRs would just encourage people to hold on to the asset until death so that only CAT is chargeable to their heirs.

The solution to this, and many other issues, would be to charge CGT on death. Then this planning point would not be an issue.

Brendan

 

[NoRegretsCoyote]

The solution to this, and many other issues, would be to charge CGT on death.

I fully agree.

My point was that the PPR exemption for CGT can't be seen in isolation from overall taxation of capital assets.

If it was up to me I would just have a high LPT and no other taxes on residential property.

 

[Purple]

If it was up to me I would just have a high LPT and no other taxes on residential property.

I think the high LPT is the best option. The older generation who want to hold onto their large 4-5 bed homes after their kids have left have to ask themselves if that's more important than seeing their children and grandchildren and being part of their lives. If your Dublin born children have to buy a house in Gorey and commute to work you won't be seeing much of them or their kids.

 

[noproblem]

I think the high LPT is the best option. The older generation who want to hold onto their large 4-5 bed homes after their kids have left have to ask themselves if that's more important than seeing their children and grandchildren and being part of their lives. If your Dublin born children have to buy a house in Gorey and commute to work you won't be seeing much of them or their ki will have to pay the high property tax.

Maybe in a lot of instances the "Kids" in Gorey and Dublin will be paying their parents "high local property tax", as well as their own.

 

[Purple]

Maybe in a lot of instances the "Kids" in Gorey and Dublin will be paying their parents "high local property tax", as well as their own.

Ye can't legislate for that though.

 

[noproblem]

Ye can't legislate for that though.

Votes will decide legislation in a lot of instances

 

[Purple]

Votes will decide legislation in a lot of instances

Yep, they normally do. That's why we do what's populist and expedient rather than what's in our medium to long term national interest.