4 ms·

Fact is poverty among the elderly is at the lowest since records began. If somebody is left behind, we can think of ad-hoc measures. It is insane to increase pe

by mmarq 4y ago

Fact is poverty among the elderly is at the lowest since records began. If somebody is left behind, we can think of ad-hoc measures. It is insane to increase pensions by 11% and offer a 4% pay rise to nurses. The young professional worked hard to acquire his human capital, that is taxed way more than rental income. Also, salaries in the UK have increased much less than rents. Besides, properties are taxed everywhere in the world, especially if they are rented out, bar the UK.

denton-scratch 4y ago
I pay tax on my rental income. I don't have a problem with my income being taxed. But if you try to tax my property, you take away my ability to generate income. I can't compensate by working harder, because I'm not fit to work 9-5. BTW: the term "human capital" is usually a euphemism for staff, isn't it? I'm not sure what it is that you think is taxed way more than rental income; my rental income is taxed as income, just as if it was salary from employment. So what is this heavily-taxed "human capital"?
- CogitoCogito 4y ago
  > I pay tax on my rental income. I don't have a problem with my income being taxed. But if you try to tax my property, you take away my ability to generate income. I can't compensate by working harder, because I'm not fit to work 9-5. Can you get a reverse mortgage to sell back some of your equity to pay your taxes? Maybe this isn't a think in the UK but it very well could be. I mean if I held market equities and no cash and owed taxes, I don't think I'd get much sympathy not selling some to pay the taxes I owe. I'm not sure why real estate should be treated differently.
  - denton-scratch 4y ago
    Yes, that's an equity-release mortgage. It's not a "reverse" mortgage; it's just a mortgage that the lender doesn't expect you to pay off (so when you die, they get a stake in the your estate). I've thought a good bit about equity-release; I might be forced into it, if my health holds out longer than I've planned for. But I was taught never to use capital for current expenditure. I try to stick to that. Thing is, it seems wrong to tax the property of someone whose only income is rental from that same property. The only way they can pay the tax is to reduce their stake in the property, and so their ability to pay tax. It's a spiral that ends in disappropriation, and dependence on the state.
    - CogitoCogito 4y ago
      > It's not a "reverse" mortgage; it's just a mortgage that the lender doesn't expect you to pay off (so when you die, they get a stake in the your estate). In the US it's commonly called a reverse mortgage. > I've thought a good bit about equity-release; I might be forced into it, if my health holds out longer than I've planned for. But I was taught never to use capital for current expenditure. I try to stick to that. > Thing is, it seems wrong to tax the property of someone whose only income is rental from that same property. The only way they can pay the tax is to reduce their stake in the property, and so their ability to pay tax. It's a spiral that ends in disappropriation, and dependence on the state. Sure I agree that you ideally don't want to draw down on your capital, but ideally you'd have the cash to pay the taxes. Going back to the case of equities, if your only income was in the form of dividends and you didn't have enough to pay taxes you owe, you'd need to sell stocks which would decrease future cash flow from dividends. I don't really see this as fundamentally different than other cases where you don't have enough income to grow your wealth after costs. E.g. when you go in to retirement. I mean it's nice if you have enough capital that you can fully live of off cash you derive from it (rentals, dividends, pensions, etc.), but if you can't then you gotta dip into your capital.

by mmarq 4y ago

denton-scratch 4y ago

I pay tax on my rental income. I don't have a problem with my income being taxed. But if you try to tax my property, you take away my ability to generate income. I can't compensate by working harder, because I'm not fit to work 9-5. BTW: the term "human capital" is usually a euphemism for staff, isn't it? I'm not sure what it is that you think is taxed way more than rental income; my rental income is taxed as income, just as if it was salary from employment. So what is this heavily-taxed "human capital"?

CogitoCogito 4y ago
> I pay tax on my rental income. I don't have a problem with my income being taxed. But if you try to tax my property, you take away my ability to generate income. I can't compensate by working harder, because I'm not fit to work 9-5. Can you get a reverse mortgage to sell back some of your equity to pay your taxes? Maybe this isn't a think in the UK but it very well could be. I mean if I held market equities and no cash and owed taxes, I don't think I'd get much sympathy not selling some to pay the taxes I owe. I'm not sure why real estate should be treated differently.
- denton-scratch 4y ago
  Yes, that's an equity-release mortgage. It's not a "reverse" mortgage; it's just a mortgage that the lender doesn't expect you to pay off (so when you die, they get a stake in the your estate). I've thought a good bit about equity-release; I might be forced into it, if my health holds out longer than I've planned for. But I was taught never to use capital for current expenditure. I try to stick to that. Thing is, it seems wrong to tax the property of someone whose only income is rental from that same property. The only way they can pay the tax is to reduce their stake in the property, and so their ability to pay tax. It's a spiral that ends in disappropriation, and dependence on the state.
  - CogitoCogito 4y ago
    > It's not a "reverse" mortgage; it's just a mortgage that the lender doesn't expect you to pay off (so when you die, they get a stake in the your estate). In the US it's commonly called a reverse mortgage. > I've thought a good bit about equity-release; I might be forced into it, if my health holds out longer than I've planned for. But I was taught never to use capital for current expenditure. I try to stick to that. > Thing is, it seems wrong to tax the property of someone whose only income is rental from that same property. The only way they can pay the tax is to reduce their stake in the property, and so their ability to pay tax. It's a spiral that ends in disappropriation, and dependence on the state. Sure I agree that you ideally don't want to draw down on your capital, but ideally you'd have the cash to pay the taxes. Going back to the case of equities, if your only income was in the form of dividends and you didn't have enough to pay taxes you owe, you'd need to sell stocks which would decrease future cash flow from dividends. I don't really see this as fundamentally different than other cases where you don't have enough income to grow your wealth after costs. E.g. when you go in to retirement. I mean it's nice if you have enough capital that you can fully live of off cash you derive from it (rentals, dividends, pensions, etc.), but if you can't then you gotta dip into your capital.