- I m not so sure that the value of an older home on a much-appreciated lot is going to be able to pay back many years worth of accumulated LVT plus interest.Message 1 of 3 , Jun 3, 2010View SourceI'm not so sure that the value of an older home on a much-appreciated lot is going to be able to pay back many years' worth of accumulated LVT plus interest. If the selling value of the land itself is vastly reduced, all that's left is the value of the house, which may be quite trivial.
Will an assessor be the one to tell her that the house itself, which might be a teardown, no longer has value sufficient to meet her accumulated debt? Will the community write that off, or expect payment from other assets, if any?
On 6/2/2010 2:47 AM, John wrote:
--- In LandCafe@yahoogroup s.com, Fred Foldvary <ffoldvary@.. .> wrote:
> From: John burns-john@. ..
> > the old lady in the large house would> > pay the same as the 40 years old next> > door in the same sized house. It must be> > emphasized that a reduction of LVT would> > occur in these circumstances.
> Do you mean a reduction in what is owed,
> or just postponing the payment until the resident dies
> or the property is sold?
Postponement. If the old lady enters a retirement home the cost would be taken from the value of the house as well - as is the case now.
> The problem occurs not when the property is first bought,
> since the buyer will know the cost,
> but when the value of the land value rises
> while the resident's income does not rise as much.
> That can be solved by market means, e.g.>
> 1) Purchasing insurance against an increase in the LVT>
> 2) Equity sharing: the resident sells equity in the building
> in exchange for the investor paying the extra LVT,
> and then getting his share back when the property is sold.
> There could be market in such equity shares.
The above two entails the resident has to enter into a private arrangement. Not good at all. Try selling that to the public! That will not sell.
In the current system if an old lady is in a large house and does not have the funds to keep it running, she sells. Currently Council (property) tax is geared towards the land/building and none of this goes into the coffers of general government tax (so they say). So people can see where that tax is going and understand that tax.
With LVT, which is Council Tax and general tax (currently income tax), it is more difficult to separate. Although, not that difficult and can be done. When taxes are rolled into one, like LVT, it is more difficult to understand.
If an old lady is left in a large house, LVT can be postponed and paid back on sale or death or moving into a retirement home. But the Council Tax aspect must remain for her to pay - a reduced LVT. If she cannot pay then she sells up, as in the current system. The reason why is that many old ladies will end up in large mansions alone for decades if LVT is postponed 100%.