$2m Home Tax - What's next?

[trainspotter]

Interesting to note that KRudd did not come out and categorically deny this 'proposed tax' today in parliament when questioned by the opposition. Mr Swan was left to defend his master by accusing the opposition of scaremongering .... hmmmmm the plot thickens.

 

[stocksontheblock]

Interesting to note that KRudd did not come out and categorically deny this 'proposed tax' today in parliament when questioned by the opposition. Mr Swan was left to defend his master by accusing the opposition of scaremongering .... hmmmmm the plot thickens.

Your right! The plot thickens!!!

It is not as though the question today, or yesterday or the day before was that difficult to answer.

Do you absolutely rule out bringing in such a tax? A yes or no will do. Not a 10 min slanging match with the opposition, and how they will do all sorts of things. The questions are clear, and I would have thought the answer to be as well.

Do you absolutely rule out that you are considering such a tax? See answer required for above question.

 

[Judd]

I wouldn't be bothered imposing a tax on the home (difficult to administer.) I'd just include the assessed value if/when the owner/occupier registered on the Title Deed applied for Government benefits.

It has been mooted for a number of years, especially in regard to applications for the Age Pension.

 

[stocksontheblock]

I wouldn't be bothered imposing a tax on the home (difficult to administer.) I'd just include the assessed value if/when the owner/occupier registered on the Title Deed applied for Government benefits.

It has been mooted for a number of years, especially in regard to applications for the Age Pension.

You missed me on that one? Government benefits? Do you mean if you have a property worth more than $2m and you apply for the OAP?

 

[stocksontheblock]

I guess the one thing that I should add to this thread is that some people have assumed that this would apply retrospectively.

It wont, or at worst it would be for the past yr or 2, or back to the start of the FY inwhich it was first implemented.

However, whos valuation will this be based on? and what if I dont get the value that has been place on my property?

Lets say I own a house and it has been valued at $2.5m. In theory it has a value which is subject to a CGT of $500K. If I sell, and the market is bad, or I need a quick sale, or I just havent sold it for a long time so I sell it for $1.9m, then what?

Or, my property on the market is not worth the rubber figure from the valuer? Remember valuations and sale prices are different for all sorts of reasons, so which should apply?

Sure, whether there is a CGT on my house, because of some valuation, what happens if I dont achieve the price someone assumes it to be worth?

How would this effect my insurance? The valuation to build is also different from the valuers belief, and the possible sale price.

 

[Buckeroo]

Well, you vote idiots in you get idiot ideas!

I would say there will be all sorts of idiot tax ideas coming up, the government will be desperate to pay off debt.

So, we now have a 3 ring circus when it comes to fiscal policy - KRudd, Swany and King Henry.

Cheers

 

[tasmart]

Re: $2m Home Tax - Whats next?

hello,

yes lets have equality, quite simple everyone pays the same tax each year

maybe 30%, easy

thankyou
professor robots

BUT ............ some will be more equal than others............

 

[Judd]

You missed me on that one? Government benefits? Do you mean if you have a property worth more than $2m and you apply for the OAP?

The principle family home is currently excluded from the assets test for those applying for the age pension and other benefits

http://www.centrelink.gov.au/internet/internet.nsf/payments/chartab.htm#a

Wouldn't be all that difficult, apart from the public outcry, to include the family home above a certain valuation level as part of the assets test.

For interest, here is the income test levels.

http://www.centrelink.gov.au/internet/internet.nsf/payments/chartc.htm

 

[stocksontheblock]

The principle family home is currently excluded from the assets test for those applying for the age pension and other benefits

http://www.centrelink.gov.au/internet/internet.nsf/payments/chartab.htm#a

Wouldn't be all that difficult, apart from the public outcry, to include the family home above a certain valuation level as part of the assets test.

For interest, here is the income test levels.

http://www.centrelink.gov.au/internet/internet.nsf/payments/chartc.htm

I am all for the family home being included in the means test for the pension, however this tax is not about the pension, and the poor OAP's. It is a tax which would apply to all people, whether 25 or 75 that have a house valued - at some random calculation - above $2m.

 

[Taltan]

The tax makes sense. Why should the capital profits on the family home be tax-free. So you buy a 3m home that goes up 10% and you make $300,000 tax free whilst the less fortunate buy a $200,000 home and make a subsequent $20,000 tax free. Why should the wealthier person get a 280,000 govt present?

I dont think it will happen though. The thing is most people with $200,000 do not understand this equation, whilst those with the $3m family home have a self-interest here. I also doubt Rudd's home is in the $200k range. So yeah it won't happen but don't pretend it doesn't make sense

 

[stocksontheblock]

The tax makes sense. Why should the capital profits on the family home be tax-free. So you buy a 3m home that goes up 10% and you make $300,000 tax free whilst the less fortunate buy a $200,000 home and make a subsequent $20,000 tax free. Why should the wealthier person get a 280,000 govt present?

I dont think it will happen though. The thing is most people with $200,000 do not understand this equation, whilst those with the $3m family home have a self-interest here. I also doubt Rudd's home is in the $200k range. So yeah it won't happen but don't pretend it doesn't make sense

Of course Dudd's home is worth a lot more than $200k, well his wife’s is, yet I don’t believe his house price will make an ounce of difference to him and his mates approving such a tax.

Why should my home, if worth more than $2m be subjected to capital gains, and someone whose home is worth less than the $2m not be? My home is my home. Most people have not brought a home as a capital investment; they have brought a home to live in, and to hopefully make some money to move out and move up, yet the primary reason is because rent is a dead-end and they want to raise a family somewhere they call home. There comes a point when all of Dudd’s efforts to scam more money out of the apparent ‘rich’ to pay for his debts and the so called ‘poor’ will back-fire. How about all the rich stop working for a year, stop propping up the poor and see what happens then!?

As I have said previously, if the family home is to be treated as an investment then how can you make a distinction between the ‘class’ of investment. The poor who buy shares are subject to the same CGT as the rich who buy shares. Why is that not different? The poor who manage to get an investment property and hope to make some additional money for later in life pay the same CGT as the rich who buy investment properties. So why should the family home be set at $2m, why not $100k.

 

[Taltan]

Well basically cause taxes are paid by the rich not the poor. I do agree with you that no distinction should be made for those with houses under $2m. The $2m was clearly only put in the suggestion to avoid the political backlash of telling common folk they are considering tax on their family homes.

The $2m does not make sense however the actual taxing of the PPR does. Currently all we have is an exemption that hurts those who are unable to afford a home and than proportionally helps you the wealthier you are. Without getting into an argument about a tax-free society, it is exactly the situation that cries out for tax to be imposed.

Rent money is only dead money because of the tax-free status of the main residence. Otherwise many people would be happy to rent and put their capital elsewhere. Its because of our tax system not the underlying economics of the matter

 

[wayneL]

There is another reason why PPR should not be capital gains taxed that has not been mentioned.

If a family needs to move home, no matter what price range it's in, they should be able to buy like for like without impost. Already there is a significant impost in the form of transactions costs and stamp duty. CGT would be totally unfair to add on top.

 

[gooner]

There is another reason why PPR should not be capital gains taxed that has not been mentioned.

If a family needs to move home, no matter what price range it's in, they should be able to buy like for like without impost. Already there is a significant impost in the form of transactions costs and stamp duty. CGT would be totally unfair to add on top.

Fair comment. One way around it would be to provide CGT rollover relief when you buy a new PPOR - a bit like a scrip takeover

 

[stocksontheblock]

It must be silly season on CGT on peoples homes. Now they want to impose it, well someone does anyway, on homes worth more than $1.1m.

http://www.theaustralian.news.com.au/story/0,25197,26113009-2702,00.html

I suppose to be able to afford a home over $2m you might be considered to be rich, yet a home worth more than $1.1m? You have got to be kidding me!

I love the comment that:

A report by the Brotherhood of St Laurence and the Australian Housing and Urban Research Institute shows the CGT exemption is worth on average $10,000 a year for the wealthiest 20 per cent of home owners.

In contrast, it is worth just $1200 a year for the bottom 20 per cent of households.

However, this doesnt say that this 20% of wealthiest home owners are rich. Just that these people are assumed - how I dont know - to be rich.

Yet it also goes onto, which I think is a contradiction, to say:

"We urgently call on the federal government to remove the capital gains tax exemption on homes worth more than $1.1m, which at roughly 2 per cent of all owner-occupied dwellings is at the very top end of the property market."

The fact that it is at the top end of the property market doesnt mean it is also the top end of incomes.

 

[gooner]

The fact that it is at the top end of the property market doesnt mean it is also the top end of incomes.

True, but it would be fairly good correlation. Obviously, plenty of exceptions in the big cities where you would have some income poor, but asset wealthy people. However, CGT is triggered when you sell, so when that happens the income poor people would have plenty of money to pay a CGT bill.

Possibly it would lead to richer families not moving house, but staying put and renovating and then passing house down to children as this does not trigger CGT now (and presumably would not under any new laws). I've been thinking about moving but by the time you pay stamp duty, legals, moving costs, real estates, utility changes and other changeover costs, I would be looking at $100k. That's a good start on a renovation. If I had CGT on top, would be an even bigger incentive to stay put and renovate.

 

[lasty]

I like how they spin it as CGT exempt.
This issue is that CGT applies only if you sell the asset or dispose of it.
Of course the accountants will be busy setting up trusts or offsetting CGT events in other ways.

"Brotherhood of St Laurence executive director Tony Nicholson said the tax concessions were unfair, wasteful and actually put home ownership out of reach for many Australians."

Umm yes.. Last time I looked the average wage was $50k in Australia so try getting a $1 million mortgage on that income Tony.

So far the govt (our tax dollars) contribute 48% of the brotherhoods annual income according to your website.
$91 million surplus on your balance sheet Tony?
Perhaps you should give some financial advise to some of our fund managers.
Not bad for a charity.

 

[Stormin_Norman]

id gladly pay taxes if the govt stopped wasting my money.

politicians should be gaoled if they cannot run a balanced budget.

 

[888]

If you can't pay tax when you're living in a $2M house, maybe you shouldn't buy the house in the first place. If you've been living in the house for 40 years and the price increased to $2M, that's another story, I think govt should exempt people been living in the house more than 15-20 years.