Monday, September 21, 2009

Lib Dems Property Tax

So the Lib Dems are proposing a tax on people who own houses worth over £1m pounds. .5% per annum for everything over £1m.

Have they seriously thought this through?

Clearly (by their own reckoning) most of the payers of this tax will be in the south east. Now, the homes in the south east aren't really any different from homes in the rest of the country, they are not all palatial mansions with 10 bedrooms and 5 bathrooms (what counts as palatial nowadays?). But, and this is the key point, they are more expensive. Why, because of where they are, not what they are.

What does that mean in reality, it costs you more to own one. So there is a triple whammy here.

Whammy 1 - It cost you more in mortgage payments to own a property
Whammy 2 - You pay more Stamp Duty when you buy/sell your property
Whammy 3 - You will have to pay an additional tax, even though owning a property doesn't give you any income neither does it neccesarily increase in value.

Bonkers.

You could argue that what you should do is tax lower priced property outside the south east, they should be able to afford it, right?

I was getting some sympathy to the Lib Dem cause up until this point. This smells of focus group policy - yuck.