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Abolish Tax Relief on the Sale of Own Residence

Comment 7th July 2010

To apply the same Capital Gain tax on the sale of property you declare as a main residence as for any capital gain.

Why does this matter?

This idea is important because I think it will-

Make tax fairer for non property owners, those who only have relatively small amounts of capital and who can't get a mortgage to buy, as they  do not have the opportunity to get this large tax concession on often unearned gain from house price increases.

Gains more in tax revenue from  the richer person with a more expensive home, and therefore more able to pay than the poorer or average homeowner, and it is therefore fair.

Simplifies the application and administration of capital gains tax, and tax return forms

Helps remove the speculation in Houses, and with it the volatitility in their prices.

Provides additional tax revenue from those who make a gain (profit) from selling their property and can therefore afford it at a time when revenue is needed.

Increases the propensity of people to rent, and removes the stigma,  as buying a home as an investment -with what is an unfair tax break- is removed as the investment of capital in a home no longer is so advantageous as an investment.

Removes tax avoidance by people who are using their home as a form of investment and change it often, only for this reason; if they are making a business in improving property it should be taxed even if it is their residence. This to be fair on others in the same business, but not improving their own home.

Finally, im my view, now is a good time to remove this tax concession as gains from house price increases are historically fairly modest or non existant. Realistically in the short term, removal of this concession would be unpopular, especially with those with high value homes set to make a great deal of gain in periods of rapid house price increase.

PS I found this idea difficult to categorise as it's can be argued its really a change/simplification to private taxation (ie regulation) rather than business, in the main – and thers no category for this. Though its definitely a regulation thing, and would reduce house price volatility in the longer term -which would be good for sustainable business rather than speculators. hope i've found it a reasonable home!

 

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