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Comment by colinramsay | Hacker News Reader

The UK is bringing in a second home tax:

http://uk.reuters.com/article/uk-britain-budget-housing-idUK...

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-3511...

In the town where I live there are a lot of summer homes that are unoccupied in winter. In London, there are obviously a lot of homes that the rich use when they are visiting. This is an extravagance that is affecting the UK as a whole and a second home tax might help a little. I don't think that the above measures go anywhere near far enough though.

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>The UK is bringing in a second home tax:

To be clear - this is a one-time 3% tax on the purchase price of second/more homes, for both occupation and rental. It's not an annual property tax.

Interestingly, it's waived for corporate landlords with (I think...) at least fifteen properties.

The UK doesn't have property taxes in the way that the US does. There is an annual tax and it is charged on second homes. But it's barely related to market value, so the tax difference between a studio flat (apartment) and a mansion isn't huge.

There are mutterings about a mansion tax on very expensive properties irrespective of occupancy, but they won't come to anything while the Tory party is in power.

I think councils can increase the council tax for second homes.

Tenants pay council tax, not landlords.

Except where classified as a HMO.

See this is ridiculous. In Ontario property taxes are paid by the landlord. It's easier to enforce when you are dealing with the owner.

council tax pays for a lot of individual local government services (state level in US terms)

Ontario property taxes == UK council taxes. I should have made that clearer.

Collecting from property owners is easier than collecting from tenants.

Ah, yes, I'm getting stung by this despite my case not being a target one.

Our house is not selling quickly (it needs "neutralizing" and showing as empty, not packed with a family in it) but we have grossly outgrown it. Luckily we can afford two mortgages so are buying the house we want and doing up the "old" one to sell. So because it's "expanding our portfolio", we'll get to pay the extra tax (some £10K+) although supposedly we can reclaim it if we sell within 18 months. So it's annoying but TBH at this rate I just want to move so que sera.. :-) For people on tight budgets, it's going to kill a lot of options though.

> For people on tight budgets, it's going to kill a lot of options though.

I don't follow this? People on tight budgets cannot afford two concurrent mortgages and WILL sell within 18 months.

If you need to pay the tax and then reclaim it, you'll need to have 10k cash handy.

If you're going to buy a 350K property, you're going to want to have access to 10K in cash anyway. If you're buying a second (even temporarily), even moreso.

If you're going to buy a 350k property, you're probably not who the OP had in mind when he mentioned "people on tight budgets."

The second home tax is a 3% surtax on the purchase price. If the property isn't ~350K, the tax isn't ~10K.

Ah, thanks. That makes more sense.

There are two situations I can think of.

1) Some people have high incomes and low liquid capital/savings after paying a deposit. (So could afford to service two mortgages temporarily but don't have the stamp duty to lay down then reclaim.) They may not be poor either, they may simply have a lot of equity in property 1 that isn't liquid.

2) Others may choose to rent out their old property for a year or so until they are in a better position to sell. This does not really make them rich landlords to target with extra tax and they'll get it back anyway, but they may not have the capital as in option 1.

I would think at least #2 would be exactly the type of target this second home tax is aimed at. And those that fall under #1 should probably not move prior to selling the first home.

As an aside, this is the first time I've ever seen a -1 score on a HN comment. New HN feature? Even my troll posts have only made it to 0 before, and I'm seeing a -1 on something that's just a statement of fact, haha :-D

Even so, paying an extra £12k is a drop in the ocean if you can afford the deposit for a mortgage on a £400k buy-to-let, which will be around £100k.

From 2017 you will no longer be able to reclaim tax from mortgage payments, which should have a bit more of an impact:

http://www.ft.com/cms/s/0/2c0281c4-2570-11e5-9c4e-a775d2b173...

(Paywall, go via Google)

Florida makes its money primarily from income tax. If it's your primary residence you can get some tax relief. If its your vacation home you pay the full weight. It hasn't made an appreciable difference in housing prices. Lots of foreign owners know they'll have to cough up a few thousand dollars every year out of their millions of dollars in assets.

Florida has no income tax. It has a higher sales tax to compensate (and other tourist-related taxes, such as on hotels and rental cars). Our property taxes are very, very low compared to other states though.

You're correct in that you receive an exemption if the property is your primary residence, but you overstate the burden of property taxes on >$1MM residences (its really not that high).

People purchase a high dollar value home in Florida because there is no limit to the value protected from creditors (except notes tied to the house) in the event you're sued or declare bankruptcy (1/2 acre of land or less within a municipality, 160 acres if you're in an unincorporated area).

Source: I'm a Florida resident.

Cook County sales tax is 10.25%. If you're in downtown Chicago there is a pretty wide area in which restaurants collect an additional 1% tax. And of course there's still income tax. I wish Florida still counted as "higher" sales taxes.

Everything you mention is true, but that's an artifact of Illinois being fiscally irresponsible. Isn't Gov. Rauner still waging war on unions and still hasn't presented a budget? Priorities man!

The home rule provisions in the Illinois constitution allow Chicago wide leeway in setting its own tax rates, and in keeping the revenue from such taxes. Chicago has mostly itself to blame for its looming bankruptcy, even though the long train of awful, corrupt governors hasn't helped any.

Agreed!

I think you mean property tax. Income tax would not have anything to do with their property (unless they were renting it out).

>Florida makes its money primarily from income tax.

You sure? I haven't had state income tax taken out of my pay check in... forever. I'm assuming you meant to type real estate/property tax, though.

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