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first time buyer & 2nd home

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  • 28-06-2007 12:44am
    #1
    Closed Accounts Posts: 292 ✭✭


    dont know if this is the right thread but here it goes

    im a ftb who purchased a apartment last year and did not pay stamp duty as it was under the threasehold. im living in this apartment atm and i am thinking of buying a second house to move into and to use this house a my principal home. is it possible to switch my ftb status to this second home ? i.e i will change my apartment to an investment property ??

    any one any ideas/suggestions on this topic ?

    i know that i can sell my apartment and then buy the house and still keep my ftb status,but i do not wish to do this.


Comments

  • Moderators Posts: 6,857 ✭✭✭Spocker


    mmm12 wrote:
    i am thinking of buying a second house

    Then you will not be a first time buyer

    More details from the Revenue website here and here

    To maintain your FTB status you would need to sell the first property


  • Closed Accounts Posts: 346 ✭✭A Random Walk


    Spocker wrote:
    To maintain your FTB status you would need to sell the first property
    Eh no, if you've bought a property anywhere in the world you are no longer a FTB, full stop. I've never figured out why this simple rule causes so much confusion.


  • Moderators Posts: 6,857 ✭✭✭Spocker


    You are correct, I was thinking of Mortgage Interest Relief when typing my reply (I was assuming this is what the OP was really asking about)


  • Closed Accounts Posts: 292 ✭✭mmm12


    but i cold sell my apartment and buy another house and keep it as a FTB ? as long as its in the 5 years ?


  • Moderators Posts: 6,857 ✭✭✭Spocker


    For what purpose? Claiming Mortage Interest Relief or payment of Stamp Duty?


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  • Closed Accounts Posts: 292 ✭✭mmm12


    both sd and interest relief


  • Registered Users Posts: 1,465 ✭✭✭TheBigLebowski


    It's very straight forward. If you've bought a property before. Whether it was 20 years ago or 20 days ago, you are not a 1st time buyer. You will have to pay stamp duty. I'll repeat, you are not a 1st time buyer.

    "i know that i can sell my apartment and then buy the house and still keep my ftb status,but i do not wish to do this."
    Where did you get this info?


  • Registered Users Posts: 1 promptlyhere


    Can you claim mortgage interest relief on an investment home if you have a mortgage for that property?



  • Registered Users Posts: 13,280 ✭✭✭✭Geuze


    Landlords can deduct mortgage interest as an expense against their gross rent, yes, subject to some conditions.



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    I oppose mortgage interest relief because that will fuel house price inflation and undercut the efforts by the ECB to reduce inflation.

    What I favour is punitive property taxes on present housing stock but exempt new builds from the tax. I also favour exempting all future first time buyers from the property rax for a period of 20 years.



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  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    In your scheme, if a future first time buyer after, say, five years sells the first property and buys a second, larger property (e.g. to accommodate a growing family) is he exempt from the property tax on his second property for the remaining 15 years? Or is the exemption only available for the first property?



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    Obviously scenarios would need to be considdered, such as the one you mentioned and also people who bought their first home shortly before the introduction of such a scheme.

    But the intended effect would be to encourage owners of existing properties to sell and buy new houses to escape the property tax. This would create a market driven demand for new houses that would be viable from the builder`s perspective. The sale of their existing houses would cause those houses to fall in price and become affordable to first time buyers. The money raised in taxation could be used for anything although I would like to see it used to knock 200 billion euro off the national debt. The reason being, the government borrowed 200 billion since 2008 and used it to inflate house prices. An enormous amount od money can be tapped by deflating existing housing stock and that policy would solve both housing supply and affordability.

    By the way, old folks wouldn`t necessarily have to move from their home of 50 years to a new house. They could simply make some arrangement whereby the kids live in their new house and they stay in the old house which the kids could buy via a mortgage.



  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    It's an intriguing idea. Couple of thoughts occur to me:

    • Existing homes will be greatly devalued and, the bigger they are, the more they will be devalued (because first-time buyers mostly aren't buying huge homes, and repeat buyers won't pay much for a house that carries a punitive ongoing tax liability).
    • The recreates the 2008 problem of negative equity; people owning homes that are worth less than the mortgage on them. But it'll be worse than last time, because those people will also be facing punitive new taxes. And their will be no prospect of the passage of time fixing the problem, since the policies in place mean that the devalued older housing stock will not recover its value in time. So you're going to have to bail out the banks again, or suffer the wider economic consequences of bank failure.
    • You have the bizarre result that the least valuable houses suffer the highest taxes, and the most valuable houses - new houses - suffer none. This is regressive.
    • You've also created an incentive to demolish existing houses (which are heavily taxed) and build new houses (untaxed) on the site. While this might update and improve the housing stock, it also means putting a lot of resources into demolishing and replacing serviceable housing, which could instead be deployed to add to the housing stock.
    • You talk about the large amount of money that would be raised, but I'm not sure that such a large amount would be raised. The point of your heavy taxes is to get people to change their behaviour to avoid the tax and, the more successful your policy is in doing that, the less tax will be raised. After a fairly short time, most of the old housing stock will either be sold to first-time buyers (so now untaxed) or demolished and replaced (again, untaxed). Non first-time buyers will compete to buy new housing (untaxed), thereby driving up the price. Actual revenue raised may not be that great.

    I don't want to dump all over the proposal because it's clear that the housing market is broken, and some out-of-the-box thinking about what might be done to fix it is badly needed. And any policy designed to lower the real cost of housing is necessarily going to adversely impact on the investment qualities of housing, which (a) will piss off homeowners who have been encouraged to think of their houses as an investment, and (b) will tend to reduce investment in housing. So, one way or another, some people are going to be upset. I just think the proposal needs more work. How do we square the circle of making housing affordable without, in effect, expropriating existing homeowners and provoking another banking crisis?



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    I was opposed to bailing out the banks in 2008 and remain opposed to bailouts in the future.

    People in mortgage arrears got away with murder. Nowhere else in history have people been able to default for years or even a decade without even being evicted.

    That of course was government policy. They didn't want people evicted because they wanted to keep houses from going on the market which would have put downward pressure on house prices.



  • Registered Users Posts: 19,705 ✭✭✭✭Ace2007


    If you buy a house with 100% cash, I'm fairly sure you are still considered a FTB from a bank if you go to buy a second property and get a mortgage



  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    You may or may not be considered an FTB by the bank, but as far as stamp duty concessions and the like are concerned (which is what the OP was asking about) you are not an FTB. The 'B' stands for "buyer", not "borrower".

    Post edited by Peregrinus on


  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    I think your proposal would make this problem worse, not better. People who continue to make their mortgage payments — which, remember, was the huge majority — would be hit with huge tax bills on top of their mortgage payments. Some would be pushed into default because they couldn't pay both; others would be pushed into negative equity, or further into negative equity than they already were, because your proposal would devalue their houses.

    You say that the intention is to encourage them "to sell and buy new houses to escape the property tax", but if they're in negative equity they can't sell and, if they do, they won't be able to buy a new house because they'll have no deposit - the entire sale proceeds of the old house will have gone to the bank - and they'll still be in debt for the uncleared balance of the old mortgage.

    I think if you want to devalue their houses and at the same time encourage them to sell, they only way to do that is to offer large loan write-offs, but only if you sell. But presumably the taxpayer would have to fund the loan write-offs.



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    Certainly all those problems would arise but they would be those people`s problems. It is important to remember that bailing out the banks, and legislating to let defaulters default with near impunity and putting the cement levy on that industry and a host of other policies were all designed to make the problems of those people the problem of those saving to buy a house. So all I am suggesting is that those problems be returned their rightful owners. A punitive tax on existing properties, while exempting new builds and first time buyers from the tax for 20 years, accomplishes that.



  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    "A punitive tax on existing properties" falls almost entirely on people who are paying their mortgages in full. How are they the "owners" of the banks' solvency problem?



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    Because it they weren't, the 300.000 who defaulted within months of the 2008 financial crisis would have been evicted in a prompt and efficient manner. Instead, people who are years in arrears are still living in those houses because the government doesn't want properties in default going on the market and pushing house prices down because they are scared of other people defaulting if their properties fall in value.

    Also the government wants NAMA to be seen to be profitable to justify bailing out the banks.

    People who defaulted on mortgages that were in negative equity should have been evicted instantaneously without recourse to the courts and then chased by special agents of the state to the ends of the earth for the balance they owed the bailed out banks.

    If defaulters are treated like owners, they should be taxed like owners .... and how!



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  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    Why would "special agents of the state" chase down people in default on their mortgages? It's not the state's job to spend taxpayers' money collecting private debts. The banks can pay their own debt collection costs, just like other creditors do.

    More to the point, if it's correct that the reason repossession is difficult is because the government "doesn't want properties in default going on the market and pushing house prices down", that exact same consideration will prevent the government from adopting your tax proposals, won't it? The reason your tax proposals are necessary seems also to be a reason why your tax proposals are impossible.

    If you can persuade the government that house prices should come down and that allowed defaulted properties to be re-sold is the way to do this, then they don't have to adopt your tax proposals. They can just make repossession easier.



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    The state bailed out the insolvent banks so the state should have protected that stupid investment they made with taxpayers money. Hence the special agents. Obviously the cost of such an agency would mean allowing the agents free reign over the indebted. By working freelance they would cost us nothing. Dept collecting does pay, if it didn't the Viper's debt collection agency would never have existed.



  • Registered Users Posts: 4,138 ✭✭✭realitykeeper


    The demographic who agree with me is growing (despite mass emigration) and the demographic that agrees with you is dying. How much longer do you think young people will tolerate this?

    As to your final point, the government adopted a number of policies to keep property prices elevated. And so they will need to go all out to force property prices down by whatever means necessary. But you are correct, they don't want to.

    I think what could shake things up would be a collapse in employment, - if the multinationals started to pull out for example. A weaker US dollar and a global recession could have that effect.

    But what would be better than a building boom to replace lost jobs if the multinationals did pull out. Taxing existing property and exempting new builds would do that.



  • Registered Users Posts: 26,331 ✭✭✭✭Peregrinus


    If endeavouring to collect the debts through vigorous enforcement procedures were cost-effective, the banks wouldn't have been insolvent, and no bail-out would have been needed.

    Bad debts are a real thing. They are not the result of laziness on the part of creditors, and the state stepping in to do what it is not cost-effective for creditors to do will, duh, not be cost-effective for taxpayers either. If the debt recovery were self-financing, the vulture funds would be doing it right now.



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