Housing Bubble Bursting

mambo

clarkwgriswold wrote:

Need I mention again that if it were abolished that prices would only go up by the exact same amount. Surely its better to pay a cut to the state than to a vendor.

If there was no stamp duty, I pay 400k for a house worth 400k and I can sell it on a week later (if I want to) for 400k.

With stamp duty, I pay perhaps 420k for the house that's worth only 400k. It's 20k down the drain. Every time I move house I have to fork out this stupid tax.

Stamp duty is a tax on moving home. What sense does that make? I wonder how many commuters are clogging up the M50 and other roads in Dublin five days a week because they can't afford to move closer to work because of the dreaded stamp duty?

If you want to tax property speculators (fine with me!) there must be a better way.

ionapaul

If people could raise 420k for the house 'worth' 400k, than surely that house is 'worth' 420k in the market! The minute stamp duty is abolished, prices will just go up by whatever stamp duty came to - those who could afford the 420k will just bid it up to that amount no matter what.

KingKenny7

On my way into work today, I noticed that there were about 6 houses for sale. This was all in the dublin 9 region adn all very close together, infact two were next door to each other.

Does anyone think this is a sign of the times?

Zambia

KingKenny7 wrote:

Does anyone think this is a sign of the times?

No just 6 signs

Could be landlords dumping old rental propertys. So in a way it is.

Back in 2004-5 I think Stamp brackets where changed the house beside me went sale agreed just prior to the change.

Before the change it was at 285 aftr the change it went to 317' in 4 weeks. Stamp duty just put that saving into sellers pockets.

Stamp was orginally designed to be an admin fee it should in no way be a percentage tax but a set fee reflecting the true cost of the admin work.

SkepticOne

Zambia232 wrote:

Back in 2004-5 I think Stamp brackets where changed the house beside me went sale agreed just prior to the change.

Before the change it was at 285 aftr the change it went to 317' in 4 weeks. Stamp duty just put that saving into sellers pockets.

Yes, ill considered "reform" of stamp duty could be far worse for the buyer than just leaving it as it is.

tHE vAGGABOND

There is far more to changing stamp duty than changing bands and actual amounts..

I like the suggestion where, like the tax in your wages, when you move to a higher band you only pay the [for example] 6% on the amount you are over that band..

That would only help buyers IMHO - and all it would do is take down the amounts being paid a bit. [I would only do this for first time buyers and those at min wage, as the govenment just cant afford to do it for everyone].

So on a place being sold for 385, you pay nowt up to 317, 3% on the amount from 317 to 381, and 6% from 381-385..

So that would be a stamp duty amount of 2160 [as opposed to a current rate of 23 grand]

Remember you’re a first time buyer only once, and I think that you should be given a break [again, as Im in that place, I would say that]. But a situation like that would enable non-irish people get into the property market more than now, for example, as they wont need to save 40 grand before they start. This would be no bad thing given the doom we are faced with if people on this thread are to be believed.

One of the smaller parties [can’t remember which] is also talking about ‘stamp duty bands’ in that if you earn the min wage you pay lesser bands than if you are a billionaire. The bands don’t differ a huge amount, but it’s about letting first time buyers and those who just cant afford to do anything right now get into the market at the bottom step and making rich people pay their fair share [ie: more!]. I know that sounds a bit ‘socialist worker’ but it makes sense to me

I also would like if FTB could maybe write the stamp duty of against tax – section 23 style, but I’m just being greedy now

conor_mc

Seriously, forget about stamp duty.

The best thing that could happen this market is for a big dollop of common sense to kick in. If/when it does, FTB's will again be able to afford a house. Fiddling with taxes and duties only prolongs the agony - as it has done in the past (bacon I and rent shoots up, bacon 2 and rents collapse but prices shoot up, stamp duty changes 2003 and 280k magically becomes 317 overnight).

Let the market fix itself first and then address the inherent flaws in stamp duty.

gurramok

Maybe as house prices go down, if the govt wanted to recoup some lost taxes in stamp duty, bring the stamp duty levels back down to where they were in '04.

ie..317.5 down to 254k

This way it'll work out cheaper for buyers and still the govt gets their share.
Agree with above that stamp duty reform is needed and long overdue.

whizzbang

I think they will get all the money they need investigating undeclared property investors, or as the revenue like to call it "The rainy day fund!"

mikemac

whizzbang wrote:

I think they will get all the money they need investigating undeclared property investors, or as the revenue like to call it "The rainy day fund!"

Is this because every year the Revenue can charge penalty interest so the longer they leave it, the more they collect?

The Revenue must be one of the few government departments that are actually very good at their job.

whizzbang

micmclo wrote:

Is this because every year the Revenue can charge penalty interest so the longer they leave it, the more they collect?

The Revenue must be one of the few government departments that are actually very good at their job.

I'm just thinking that they are swimming in cash now so they don't really need to worry about being too harsh on these people. When times get leaner and they are not so busy counting stamp duty payments they can go after the CGT on the unofficial landlords all over the country! I was not even considering the fun they will have with interest!

Does anyone know if they have the right to ask the banks for the details of anyone recieving rent sized direct debits each month from other members of the public. If they can I'd say that's where they'll start.

I have to say whenever I have dealt with them they have been very good, that's why I'm surprised they are not tracking this down yet. I just imagine they are saving it for when they need the money.

Pa ElGrande

whizzbang wrote:

I'm just thinking that they are swimming in cash now so they don't really need to worry about being too harsh on these people. When times get leaner and they are not so busy counting stamp duty payments they can go after the CGT on the unofficial landlords all over the country! I was not even considering the fun they will have with interest!

speak of the devil....

Revenue to target thousand of Irish investors who wrongly claimed stamp duty exemptions on new properties
http://www.finfacts.com/irelandbusinessnews/publish/article_10008876.shtml

whizzbang

Pa ElGrande wrote:

speak of the devil....

Revenue to target thousand of Irish investors who wrongly claimed stamp duty exemptions on new properties
http://www.finfacts.com/irelandbusinessnews/publish/article_10008876.shtml

looks like I spoke too soon, there they go!

Interesting that it is only the stamp they are after for now, I'd say these people are in for some nasty CTG when it comes to selling the place once the revenue have identified them as investors!

A Random Walk

whizzbang wrote:

Does anyone know if they have the right to ask the banks for the details of anyone recieving rent sized direct debits each month from other members of the public. If they can I'd say that's where they'll start.

They can look at any accounts they want, they don't have to ask the banks to do anything but hand over the details. With the new EU savings directive, they can even look at EU accounts. Oops for all those "smart" overseas investors who don't declare rent received here.

whizzbang wrote:

they can go after the CGT on the unofficial landlords all over the country! I was not even considering the fun they will have with interest!

CGT? That's easy. It's stamp duty & income tax on rent that is going to kill those landlords evading tax. Particularly those getting cash in hand. The revenue will have on one hand an annual rent relief form from tenants showing how much they paid to the landlord, and they will simply write to the landlord asking him where he declared this income. Interest, penalties and possible jail to follow.

mambo

ionapaul wrote:

If people could raise 420k for the house 'worth' 400k, than surely that house is 'worth' 420k in the market! The minute stamp duty is abolished, prices will just go up by whatever stamp duty came to - those who could afford the 420k will just bid it up to that amount no matter what.

If stamp duty was abolished, the price would undoubtedly go up (though there's no proof they will go up by the full 20k!).

But if you buy the house, it's not "worth" 420K to you since if you subsequently sell it, 20k that the new buyer pays goes to the government, not to you! :mad:

I repeat, it's a tax on moving home. Why must the government discourage a mobile, flexible workforce in this way, and therefore increase commuting times??

Smoggy

The solution is a banded % tax, like income tax.

Pa ElGrande

Just a thought, if stamp duty on the sale of property was removed, the government of the day (does not matter which political party) would need to make up the shortfall in revenue, would it not be highly likely that an annual property tax be introduced?

From the taxman's point of view that would more than make up the difference of income lost from stamp duty on a property over the natural lifetime of the owner.

SkepticOne

Pa ElGrande wrote:

Just a thought, if stamp duty on the sale of property was removed, the government of the day (does not matter which political party) would need to make up the shortfall in revenue, would it not be highly likely that an annual property tax be introduced?

From the taxman's point of view that would more than make up the difference of income lost from stamp duty on a property over the natural lifetime of the owner.

It would also encourage the efficient use of properties. No more sitting on empty properties in the hope of capital appreciation. This, combined with greater rights for renters like in most other EU countries would solve most of the problems in the irish maket. If you want to improve labour mobility then make it more attractive to rent.

What would you want to remove stamp duty for? Are ya mad?
This country is swimming in money - its NEVER been so well off.
House prices will level off - all this talk of doom and gloom is just silly and mainly from people who missed the boat - God your all such begrudgers

Supercell

Pa ElGrande wrote:

Just a thought, if stamp duty on the sale of property was removed, the government of the day (does not matter which political party) would need to make up the shortfall in revenue, would it not be highly likely that an annual property tax be introduced?

From the taxman's point of view that would more than make up the difference of income lost from stamp duty on a property over the natural lifetime of the owner.

My biggest fear is that they would simply raise taxes for us all, ie vat, personal tax. The rich benefit from higher property prices and the poor pay to make up the shortfall in taxes.

Our polititions and press are just glorified developers, cute hoorism will drag us back to where we were before the eu handouts.

As to the insane post by "blindjustice"..let me correct you- "This country is swimming in borrowed money - its NEVER been so much in debt."

A Random Walk

I notice that in Berties speech tonight he didn't mention stamp duty once in connection with the FF tax package.

ixoy

Deleted User wrote:

What would you want to remove stamp duty for? Are ya mad?
This country is swimming in money - its NEVER been so well off.
House prices will level off - all this talk of doom and gloom is just silly and mainly from people who missed the boat - God your all such begrudgers

See most people I know - in their mid-to-late 20s aren't swimming in this so-called money. We missed the boat on property because it had generally departed before we got enough money to buy a ticket..

I can't be the only one musing over the "brilliance" of a Celtic tiger that sees two people having to chuck all their money into buying a property that's 10-15 miles further than their parents property that was bought on a single income? Excuse me, but I think that allows me a bit of room to begrudge and pray for some lowering of prices.

ronbyrne2005

Blindjustice is being sarcastic guys.

Bluehair

For those of you that might be interested there's finally a method (other than actually buying or selling a house!) to put your money where your mouth is...

Delta Index have just started a house price index where you can lay a bet on what direction things will go.

If there's any other spread betting companies facilitating such a trade i'd also be interested. I know which way i'm betting....

Iristxo

That's rusbish. A lot of people who HAVE a house and can't see the wood from the trees are actually HOPING that prices won't go down and they're stupidly thinking they will stay up or they will go up more and even though they would not go out to buy another house they still could bet that the market would go up. Such an index is not true relection of the markets I think, this is not the oil market or the gold market.

Bluehair

Iristxo wrote:

Such an index is not true relection of the markets I think

It's as accurate a reflection as you're going to get and bearing in mind the effect that the degree of betting will have i'd argue it's more representative of true values that what the estate agents would have you believe.

Either way i expect to see it drift slowly down...

ronbyrne2005

ronbyrne2005 wrote:

Blindjustice is being sarcastic guys.

yes - and in fact what I posted was the stubborn attitude I am still encountering at the moment. People still firmly believe prices *CANT* go down
I am merely a begrudger! (even though I profited from the bubble and these people know it)

I came across a person who said so and so hasnt settled down yet etc etc he hasnt bought anything yet.
Apparently this persons and many others ways of measuring success was whether so and so had a property or not!

I am amazed that people still dont realise whats going on

Iristxo wrote:

A lot of people who HAVE a house and can't see the wood from the trees a

ronbyrne2005

Iristxo wrote:

That's rusbish. A lot of people who HAVE a house and can't see the wood from the trees are actually HOPING that prices won't go down and they're stupidly thinking they will stay up or they will go up more and even though they would not go out to buy another house they still could bet that the market would go up. Such an index is not true relection of the markets I think, this is not the oil market or the gold market.

Yes but if prices are truly overvalued you will have traders with more capital betting against those who think prices will keep rising. These "blind" homeowners and bullish traders would be cannonfodder for insiders in mortgage companies, estate agents and anyone in finance who sees market tanking. The sentiment on both sides should lead to a consensus being reached (in numerical terms) which should be most accurate predictor of future movements.

Victor

Stamp Duty needs to be moved to either an annual tax or alternatively to a Value Added basis, although one risks abuse and / or injustice and one needs to do it properly.

ixoy

Deleted User wrote:

yes - and in fact what I posted was the stubborn attitude I am still encountering at the moment. People still firmly believe prices *CANT* go down

Apologies to you then. As a poorly-researched anecdotal evidence of this, I looked at a propety on daft.ie with an asking price of €280k. 1.5 weeks later and it's €274.5k.

I came across a person who said so and so hasnt settled down yet etc etc he hasnt bought anything yet.
Apparently this persons and many others ways of measuring success was whether so and so had a property or not!

Well that's terrible. I want property right now because I'm in a couple and we want our own space and somewhere to settle down. We don't want to share a place and we want security of tenancy - living in a rental situation, there's only a degree of control on how you live and even less on what you can do with the place.

We're looking for a home, not just an investment fund, and that's why I found the whole thing currently frustrating as to whether it's going to continue to decline or if now is as good as time as any (with respect to stamp duty, we'd be buying below 317k so it's a moot point for now).