Landlords should have to pay income tax on their rental properties regardless of whether they're rented out or not.
cross-posted from: https://lemmy.crimedad.work/post/12162
Why? Because apparently they need some more incentive to keep units occupied. Also, even though a property might be vacant, there's still imputed rental income there. Its owner is just receiving it in the form of enjoying the unit for himself instead of receiving an actual rent check from a tenant. That imputed rent ought to be taxed like any other income.
https://gothamist.com/news/more-than-13k-rent-stabilized-units-in-nyc-are-sitting-empty-for-multiple-years-report-findsOpen linkView original on discuss.tchncs.de637
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Landlords do have to pay an income tax on property regardless of whether it is occupied or not, it is just that when a property is not being rented, it generates 0 income and 30% of $0 is $0.
Do you mean some sort of land appreciation tax?
Don't forget about real estate taxes in lieu of an income tax when empty. They are due whether a place is rented or not.
Income tax can only tax income.
As others have said - land value / property tax is supposed to take care of this. You could also add a specific vacancy tax.
In Switzerland real estate generates a virtual rent that you need to pay income taxes on.
E.g. even if you buy a house for yourself, the money that you save by not having to pay rent is calculated as extra income.
I disagree with a specific vacancy tax. If that's truly an issue, we should increase the property tax. Property tax it already due regardless.
A property tax would just pushed onto renters like mortgages already do. A vacancy tax would not have a renter to push onto.
Landlords would still probably factor it in, so I think assuming a base vacancy rate of 1-2 months months per year would be wise. That way, there is time for normal maintenance between tenants, and if it adds up over a few years they'd have time for major repair after a long time tenant leaves, but it would still incentize not leaving the house vacant unless absolutely necessary.
Most vacancy taxes around the world only kick in after a period of vacancy, say 6 months.
Sure, but it pushes it onto wealthier people more, since generally cost of property scales with income. It would also discourage vacancy even more, which would put more properties on the market, and it would probably push property values down because the long-term cost of ownership is higher. Likewise, cities and states tend to get their income from property taxes, so they could reduce sales taxes to account for it, and sales tax is much more regressive on the poor.
So I think it would be a net benefit.
You do realize this discussion is about the housing crisis right? The one caused by the available units being below the demand for them, causing prices to rise?
Punishing landlords for vacancies won't materially help things, the only real solution there is zoning changes to encourage more construction of higher density housing instead of lower density housing. We can only build so many housing units in a given year, so we should be focusing on higher density instead.
But we're not talking about zoning in this thread, we're talking about taxation.
Vacancy rates are really low for residential property pretty much across the board, at least relative to the last few decades. So there's not a lot we can do just by changing the costs for vacancies. The reason I suggest increasing property taxes is for a few reasons:
Since we have a limited capacity to build new housing, we should encourage building the types of housing that will resolve the crisis. Penalizing vacancies just encourages landlords to fill vacancies ASAP instead of renovating properties, whereas increasing property taxes should encourage more dense construction.
I'm sorry, I misread your post, and completely missed the last line (it was a long day). I thought you were arguing against this suggestion.
I agree, taxes aren't a huge part of the solution, and incentivizing high-density housing (as well as making them more palatable)is a bigger part of it.
The housing crisis cannot be solved by taxes. They are irrelevant.
This is basic economics, supply and demand. Reducing demand will affect prices, and incentivizing not having vacant properties will increase supply.
This is not the complete solution, but it will have some effect. And thinking there is a single complete solution is as wrong as thinking that the suggestions in this article are that complete solution.
Changing taxes won't do anything as they don't affect the property market much. The only real solution is to build more. But to build more, construction should be deregulated. But that will make landlords in the government poorer so that will never happen.
Why stop at a vacancy tax?
We should go full georgism.
Losses during the vacancy period would just be accounted for by bumping up the rent on tenants a bit. If you expect an average vacancy to cost you $1200, you'll just increase rent by $100 a month.
Sure, you could accept the loss, but if you're okay with that lower profit margin, you'd have already decreased the rent by that same $100.
It assumes the owner is planning to fill up the house sooner rather than later. It would punish those who are just sitting on empty houses for an extended period of time because no renter would want to pay the extended vacancy for that extended period, and progressively gets worse with each added time period.
I'm not hugely against vacancy taxes really, but they need to be well-targeted to not affect the occasional bit of bad luck or renovation. Otherwise, the only way it actually helps the market is if it causes enough previously withheld supply to enter the market, and most expensive cities don't actually have all that many vacancies. NYC is at something like 5%, which included units between tenants and those under renovation. Sure, there's the occasional billionaire with an empty penthouse, but compared to the millions of renters looking for normal housing, there really aren't that many rich oligarchs hoarding housing for fun and games.
Its why i think of they did, there should be a minimum amount of months, and then applies after the amount of time.
If the landlord can increase rent by $100 and the market will bear that, why is the lack of a vacancy tax stopping them? Landlords charge the maximum that the market can bear.
All landlords have occasional vacancies, so a vacancy tax would increase the costs that all landlords bear, at least slightly. Landlords will name the highest price that won't cause renters to simply choose an alternative. If there is no cheaper alternative because the entire market is being affected, they simply have to find a way to deal with it.
Many vacancy taxes already exist all around the world. There is not a single one that taxes normal short vacancies. It is just false that this increases costs for all landlords. The vast VAST majority of landlords will never pay it.
On the other hand, the increase in supply due to the tax can be noticeable, which has a much bigger effect lowering prices.
Higher property taxes=higher rents to pay property tax
In a vacuum, sure, but it would also discourage vacancy, which increases supply and thus puts downward pressure on rent prices.
I've heard of landlords artificially decreasing supply as rents go up so they can maximize profit per unit, or at least maximize expected rents to allow for better terms on loans (see NYC's insane real estate market). This would penalize that.
Also, property tax is often a progressive tax since it's based on value, not consumption. Many states get most of their revenue from sales taxes, so a state level property tax could replace a sales tax, which is notably regressive on the poor.
It would discourage home ownership and probably encourage more dense housing (reduces taxes per housing area), which is a lifestyle change but probably better for urban planning.
Income tax on no income sounds fucking stupid. Just up property tax on the 3th or 4th house or apartment by a fuckton, watch everyone panic sell their shit crashing the housing market into oblivion and call it a day. Ez affordable housing.
Denmark applies a property tax to foreign properties at ones disposal. If it's rented, it's waived and tax is levied on the rental income. If it's unoccupied, it's considered a luxury available for your use and thus is taxable property, even though it's in a foreign jurisdiction.
Multiple holder companies incoming. Now that will need to be plugged up.
Not saying this is a bad idea. But they will find loopholes.
Don't allow companies to own homes. Homes should not be investments.
Then renters will be homeless.
Every single one of all the government measures I've seen to "help people" in the current "tight housing market" is designed to prop-up housing prices and rents, never ever anything which would lower rents or house prices.
In my country they even given money to renters rather than, say, impose rent controls or start large projects building public housing and do this all the while claiming there's not enough money for things like Education.
From my own experience working in Finance every single government measure I've seen on this since a decade ago sure looks a lot like using the power of the State for manipulating the housing market to push prices up.
Not to be a downer, but how does this fit into personalfinance? Like at all?... I mean, I agree with the point but this belongs in politics or something.
Yeah, this post should be removed.
I'm glad to find this comment here. I was about to unsubscribe because I'm here for personal finance; not tax policy debate or politics.
Now if a policy like that did come out and the article helped to navigate or take advantage of it as an individual, then I would be interested.
Isn't real estate affordability an important part of personal finances?
This is an opinion piece on something that might slightly effect rent. If this is personal finance related than so is literally every economic or business article ever written. Because everything can maybe effect someone's rent or other expenses.
I'm going to be honest, I see where you come from, and how this is not textbook personal finance.
However, Lemmy is still in its very infancy, and I try to keep this community active. It's not always easy to find content to post (most of the PF subreddit is usually questions from users), so here it is.
By the way, if you have any interesting content or question, feel free to post as well!
Literally no one can afford houses these days. This only affects rich and privileged people.
There are houses that sell for the same price as a car ($20‐50,000) in Pittsburgh, so your absolutist statement is dead wrong.
There are plenty of houses for sale in the 50-70k range in smaller towns that orbit large cities but sure, "literally no one"
One of the worst parts about house searching is when you look up how much you can get for relatively little if you're willing to live in impovershed areas in the middle of nowhere. The kind of places defined by the main industry that left the area at least a decade ago.
Then compare it to where you actually have to live die to life and career situations.
This is literally not true.
Landlords should pay 100% tax on their empty rentals.
You'll see how fast they will accept any and all new tenants, at a much lower price.
Which would also flood the market with housing, lowering the prices even more until renting becomes an actual beneficial option compared to buying and paying off a loan.
Real estate would also not be seen as an investment anymore.
In this case landlords could just pay some money to fake tenants to make their rentals appear occupied (at a ridiculously low price). Rental prices could even rise because of free rentals number reduction and necessity to cover additional expenses.
Real estate should be considered an investment. It's one of the few things people invest in that is actually valuable. It's the speculative and labrynthine financial markets that are the problem in that regard.
The only reason mega-renters like Blackrock and Vanguard are able to monolithically buy property in the first place is because of dubious speculative earnings and government bailouts.
It's not surprising that home ownership was actually a lot higher 60 years ago.
People require to land to live on, it is a basic necessity, and basic necessities absolutely should not be considered an investment.
What should people invest in then? How is land ownership handled? Etc etc etc
Literally any other type of business.
People should still be able to own land for their own personal use. Land used to extract wealth on the other hand should be more tightly controlled. We should ideally implement georgism to free up the land that the rich own and to increase land use efficiency. After that ownership should look pretty much identical.
You've just eliminated perhaps the safest, most attainable method for the average person to achieve passive income.
Other than living on it, why would someone want to own land?
If the "safest most attainable way" to get wealth requires others to be homeless or unable to afford a basic necessity then it isn't not worth it.
And it arguably isn't the most attainable way, because so many people are being priced out of owning a home because of the current system's failures.
To use it for a business or enjoyment. I'm not sure where you are going with this.
The average person is not a landlord
This is wealth extraction
So you're okay with some rich person owning acreage as long as it's for their own enjoyment but not for a normal dude who has an investment property and is holding out for a renter that will adequately cover his costs and generate some profit?
And? Should we be trying to help people earn income for doing dick all?
Yeah because they just plucked the property off of a tree... people often work years and years to get enough for a property investment and it can take 30 years to pay it off. Throughout all that time they are responsible for maintenance, insurance and a litany of other things to keep it from falling into disrepair.
Housing can be affordable, or it can be an investment. Not both.
Why would I build a house if I can't make money on it?
...to live in...
Obviously not talking about a property I intend to live in and not sell...
Because you want a nice house to live in?
Building should be profitable, owning should be of limited profitability.
All you've done is move the point I'm arguing to the building process instead of renting.
Building is separate from owning.
But why should it be anything but a personal investment? I'm not seeing your point there. Isn't it better for everyone to decommodify housing?
What do mean? I don't see how what I said negates that.
Not really no. Commodfication is why things used to be cheap. High [insert item here] prices are directly related to money printing, corporate welfare and regulations that are designed to raise the barrier of entry for normal people.
It didn't work this way in the real world.
I'd be so angry if I found out a nusince neighbor was paying less rent than I was.
I don't know about this, but the non occupant owners should have to pay obscene property taxes and then reduce the rates for owner-occupants to a reasonable level.
If buying a house isn't right for you - and for many renting should be the better option - then you will be forced to pay a lot more so the landlord can recover not only the cost of the building, but also that much higher taxes. In effect you are pushing people who really shouldn't buy a house to buy one anyway.
If they keep the price reasonable to begin with, then the unit doesn't go vacant, and they don't have to pay the vacancy tax.
The amount of vacant units in cities where people actually want to live tends to be highly exaggerated (Manhattan is generally sitting somewhere around a 5% vacancy rate), but twisting income tax into some weird kind of tax on unrealized value is administratively messy and completely unnecessary when we already have much simpler solutions in the forms of land value taxes or even basic property taxes. Not to mention, increasing taxes on rental units just increases everyone's rent, which is a rather odd strategy if the aim is to make housing more affordable.
People really will propose literally anything except the wild concept of building more housing.
Can you explain this to me? Surely a landlord charges the highest rent that the market can provide. Why would taxing the landlord increase the Tennant's ability or willingness to pay a higher rent?
A policy like this would apply to the entire market. All landlords have vacancies at least occasionally, due to renovations or bad luck.
It won't affect a tenant's ability to pay more, but a policy that increases ownership costs across the board means that there won't be cheaper alternatives in the competition, so the tenant will need to either find a way to pay the increase or they'll have to leave to a cheaper market. The highest rent the market can bear will go up if it's not possible to compete any further on lower prices.
Wouldn't it only apply to the local market? A lot of people, particularly higher earning white collar workers have the ability to demand a work from home policy. Could they not move further away to cooler markets if their commute is eliminated or reduced to only a few days per week? Surely that would put downwards pressure on the inflated local market, moreso if a progressive tax system is implemented (eg tax rates increase % after value increases by a certain threshold).
Unless I'm grossly misunderstanding how land tax works, it won't evenly apply across the board (even a flat % tax would be a higher burden for more expensive properties). This would drive people towards constructing cheaper housing as the bottom falls out of the top end of the market, which in turn would make housing cheaper for owner occupiers in those cheaper markets. Isn't that the desired outcome?
It's similar to credit card companies sharing merchants extra fees. They pass those fees down to the customers.
Credit card companies spend a considerable amount of time and money trying to work out how high they can optimize these merchant fee rates. A credit card charge is painstakingly optimized to maximize profits. Often credit card companies pay a portion of these fees because the competitive market will not shoulder the burden - customers will move to a cheaper credit card, which is why cards with high fees often try to entice customers with rewards programs).
Without the ability to influence demand, the seller can either eat the cost or remove themselves from the market, my question is how does increasing the tax move the needle on demand knowing that any rational acting landlord is already acting to maximize their return on investment? Are you suggesting that they'll copy credit cards and increase rates but offer some bonus program to increase demand? I'm not convinced that would work.
Housing is constantly being built, then immediately purchased by corporations at ridiculous prices. This artificially raises values in the housing market, which is paid by people who rent these homes, because they don't have an affordable home to buy. Sadly, it's not as easy as just building more.
Things like that is exactly why there needs to be a limit on how many buildings/houses an owner can own.
So a less efficient and more complicated land tax? Is there any benefit to this compared to just taxing based on the value?
The idea is to make it financially uncomfortable to retain real estate in a manner that harms society.
That's literally what a land value tax does.
For as long as I've been alive, one of the lines I've heard is that real estate is always a sound investment. There have also been land taxes for that entire time, most of them being land value taxes. The evidence suggests that the most common form of land value tax, which does not consider how many residential properties an entity owns, is not doing much, if anything, to disincentivize purchasing residential properties as an investment.
Land value taxes are quite rare in the US.
A property tax and a land value tax are a bit different: a land value tax taxes the unimproved value of a plot, while a property tax taxes the total value, including the assessed value of the buildings on the land.
One effect of property taxes is that a parking lot downtown pays a fraction of what an apartment building next door pays. With a land value tax, they pay the same, which discourages land speculation by encouraging efficient uses of land.
And we've certainly never gone as far as Georgism, which suggests a land value tax as the main or only source of government funding, set to be around what an unimproved lot on the same location would lease for.
Fyi, what you want to say is that we should have a wealth tax. I agree with you on that. We should also tax stock holdings similarly.
Ummm, a lot of people that are NOT rich, own stocks. Like nearly every 401k. If those stocks go up, then there is a tax, it's called capital gains and goes up for higher income earners.
Also, where I live there is a tax paid on vacant rental property. It's called property tax. I do not believe people, rich or poor, should be taxed on money they are NOT making. This would hurt owners with a legitimate reason to have a property vacant, like renovations, repairs, or a soft market. So in addition to rent loss the owner would have to pay taxes because the assumption is that the owner is enjoying it?
I don't think there should be a wealth tax. I think the wealthy should just actually pay some taxes.
You need to go back to school professor. All wealth tax proposals are progressive, only affecting those with substantial investments. I used to dislike them, but a tax starting at 1% on $50 million with the highest rate (say 3%) on net worth above $1 billion wouldn't hurt anyone.
Also, that tax can't be avoided either. Even if a billionaire moves to a tropical island with no taxes, their money is still invested in developed countries. It's too much to invest in tax havens. You just need good KYC to know who the ultimate owner is.
I don't understand why people have to insult to make a point.
I think eliminating tax loopholes, causing rich people to pay their fair share of taxes, is waaay better than an extra tax on incomes over a certain level. It's more fair and also doesn't hurt anyone. Tax avoidance is the reason a wealth tax is even an idea.
"eliminating tax loopholes"
Those words mean nothing without specifying which loopholes you mean. I'm not insulting you, I'm just saying that you are trying to sound smart while not contributing anything.
Is this a real sentence, typed seriously, with no irony? What a world.
Why do we put retirement funds into stocks?
Because we convinced everyone that's the only place where your money can grow?
So that every time Wall Street can and will again hold everyone hostage?
We should rethink this whole approach.
Perhaps, but unless it's a bond fund or something, most of the options are funds that hold stocks. It's the way it is.
Also, ironically, buying a property to rent is trying to "rethink the whole thing." So naturally, it should be taxed even if it's not making money.
If also like to point out that the article linked did not mention taxing the landlord. I guess that was the poster.
What are the unintended consequences of this proposal? It is amazing how many people replying to this topic have proposed something without considering what effect it will have. Sure there is a problem, but most solutions have serious negative downsides.
I don't think people care about the downsides for landlords anymore. Real or imagined, perceived greed is what people blame for high rent costs. They're ready to make greedy landlords suffer as they have and I can't say I blame them one bit.
The fundamental misunderstanding in this view, IMO, is that greed is not something that landowners are uniquely equipped with. Rice is cheap as hell; are rice producers simply not greedy, and that's why rice is cheap? No, it's because an absolutely massive amount of rice is produced every day, and there's more than enough around to ensure anyone who wants rice can get it. Slightly more abstractly, there is more than enough supply to meet the demand. And like housing, cheap food is an absolute need. But unlike food, housing has been woefully underproduced for decades now in cities, and government policy has done a lot to cause that. It's illegal to build denser than single-family homes in most urban land, and the aim of policy has been more to protect people's investments rather than have housing be affordable - two goals that are fundamentally at odds with each other.
This isn't a coincidence, of course. A lot of federal housing policy goes back to the 50s and 60s, when you had suburbs that literally banned people of color from living in them. Housing policy was explicitly designed to advantage landowners and penalize renters, which is to say, wealthier white families pursuing The American Dream™ and urban Black families whose neighborhoods were systematically redlined and demolished to build highways for white suburbanites.
Sure, all that's true, but it doesn't invalidate what I'm saying. I think people are angry and ready to get out the pitchforks. There's been decades of policy debate with no actual improvements to the situation. People think politicians and the wealthy are using discussions like the one you're trying to have to delay meaningful change rather than find an agreeable solution for all parties. That's not to say you're wrong but you're assuming people want to avoid punitive action and I don't think that's true.
Totally agree with you; this frustration is a direct and obvious result of decades of policy failures. I just worry that a lot of the ensuing anger is a bit misplaced.
I do think that there's been a sharp acceleration in recent years towards actual concrete steps, even though they're not super flashy and will take more time to see results. There's been real progress towards zoning reform, abolishing parking minimums, and other bits of red tape that have played a huge role in housing costs exploding.
It probably will end with some poor decisions being made but sometimes a bad decision is all you can get. Hopefully it will get more meaningful discussion going at least.
Speaking of which, I appreciate your point of view and your demeanor. Civil discourse seems pretty rare these days.
Same here! It's not often you get a online discussion about economics or housing policy that's civil and productive.
The landlords have much bigger pitchforks. Called the police, and the city government.
and they will fight any and every expansion of the housing market in order to protect their power and further increase housing values.
What downsides? You come out talking about unintended consequences but give no examples.
Look at all the different responses to this post. I've given many different answers to different proposals.
That's what property tax is for.
They're not expensive enough apparently
In Denmark most apartments have “residence requirement” - if you own a unit and keep it empty the city will fill it with someone waiting for public housing.
That's great? Would you have a link? That could be a post on its own
landlords ought not exist
Ahem.
Landlords should have their rental properties seized and placed under the ownership of the local government. Berlin did it. You want to bring housing prices back into reach of the middle class? Stop letting people hoard houses.
Yes!! Abolish private property, let the government control it. Seize the means of production while you're at it.
Wait, it seems like I've read that in history somewhere...
They don’t? They do where I live. Property tax is real in Michigan.
Just add land value tax
Georgism is the way
My main concern is Friedrich Hayek's concern that valuations wouldn't be fair. Where there's an opportunity to game the system, those with means will. But maybe it's better than our current system.
I would like to see working examples first, if possible.
Absolutely. It's one of my few gripes with georgism. And at the end of the day a shitty implementation of georgism is better than our current shit show of billionaires and mega corps paying $0 or next to $0 in taxes. Sometimes they even get paid instead.
But anyways, I haven't seen much detail about how to fairly valuate land, but I've had some thoughts on it. The number one thing should be that all land is taxed at the same percentage, but each plot is valued differently. I think one of the ways to do this would be to simply calculate how far a given plot is from the nearest city center, and factor in how big the population of that city is.
It's something that can be objectively measured, should be roughly correlated with what we could subjectively agree on is valuable, and isn't something that could be gamed easily.
The Netherlands has a land value tax, though it is not the sole income source for their government.
https://www.iamexpat.nl/housing/real-estate-news/how-does-it-work-taxation-real-estate-netherlands
https://www.government.nl/topics/valuation-of-immovable-property/how-can-i-check-the-woz-value-is-correct
My understanding is that the government employs people to assign a value to each plot, and from there the use case of the land is considered. Land owners can then appeal the judgement if they like. I know there are some other countries besides the Netherlands that have a LVT system, but the Netherlands is the first that comes to mind. I'd honestly be ok with either of these systems of determining land value, either the one I made up or the Netherland's. At the end of the day it's pretty much the only way to tax the rich without them just moving their money elsewhere. You can't move land after all, and much of their wealth is tied up in land.
Here is a research paper into the effects that might interest you.
https://www.elibrary.imf.org/view/journals/001/2022/263/article-A001-en.xml
Thanks, I'll check it out.
I generally think the Netherlands makes sensible decisions (e.g. routing traffic around Amsterdam instead of through it, investing in rail and cycling infrastructure, not having a tipping culture for restaurants, etc), so it's expected that they would have a decent solution here too.
I wish the US would take a page from their book and focus on moving people instead of cars, because pretty much everything else follows from that.
I'm right there with you. I feel like I'm talking with aliens when I say stuff like this to other americans.
Yeah, it just makes perfect sense in an urban environment. If they want the "traditional" American car-centric lifestyle, then they can live further from city centers and commute in.
I'm lucky enough to live in a place that is a little bit walkable (7 eleven, pizza shop, beer store 2 min walking with a grocer 15 walk), there is so much more that could be done. I wish I didn't have to get a car, and I am so close to basically ditching mine for an e-bike. The only thing stopping me is that my city's bike safety is not the best.
So close, and yet so far, why so desperate to cling on to capitalism??
Georgism is not a form of capitalism. Georgism is a strategy for government revenue. Regardless of what type of economy you have, unless you have pure anarchy there needs to be a source of income for the government. Georgism is the least bad option, they're all bad.
I usually fall somewhere in the range of what people call socialism. I'm certainly not a capitalist.
Although I love the gothamiat. I think they should pay taxes. But what does this have to do with personal finance?
Landlord should always have a few not rented places so that when someone is ready to move there is a place they can go. They also should be doing major remodels and upgrades approximately every 30 years which means a long stretch of not occupied.
By major remodels and upgrades I assume you mean slapping a coat of white paint to cover the cracks and mold, right?
The coat of paint should be done every 5 years, or when a tenant moves out.
Major I mean things like replace the HVAC system, rewire to add GFCIs, replace windows with something better. If it doesn't cost $20,000 it isn't major. Most landlords do not do this, but it really should be part of the cost of doing business.
That's called hostels or inns etc. Right now if places are empty it only means someone can't come because it's not for rent.
Keeping the place for repair is legitimate, but it's not what's done either. It's be easy to make an exception for repair.
hostels and inns serve a different niche - temporary housing is important, but they don't give nearly as much space. If you want to live someplace for a year or more then you want more space for your stuff (how much is personal)
This is just tinkering around the edges. We need land value taxes. This is a guaranteed way to solve these massive housing crises occurring in so many Western nations. LVT ensures expensive land is utilised better. Either by highly productive businesses, or higher density dwellings. Either way, society makes more efficient use of the land, and prices are constrained. It's an excellent way to ensure land banking is disincentivised, and that rentals don't stay vacant. Even Adam Smith was in favour of an LVT. Economists are almost unanimous on its efficacy. The only reason we don't widely deploy them is because it will hurt house prices and voters don't like that.
landlords don't like it either. At least in NY, the lanlore lobby is incredibly strong.
A LVT/georgism system would instantly kill the profit margins of all landlords around the country, so they will do everything in their power to prevent it from happening. All the more reason to do it.
A penalty for units that have been vacant longer than 6 months makes sense.
Units need to be rehabbed, but keeping a property uninhabited for long periods of time should have a disincentive tax applied to them.
https://youtu.be/uT5tQV3aPik?si=LKDI44ZDOvcMPYJp
Though I don't think this is necessarily a bad idea, why not require rent payments be rewarded with a proportion of equity shares equal to rent (less a small prercatage for upkeep)? That's entirely within the capitalist model but drives value into the hands of the people/occupants where it belongs. Aggregating land holding to a small class of the population is clearly untenable. Give people their equity back. Seems more direct.
You’re just describing a mortgage.
That's how it is here in Belgium. I pay tax on the income I would get if I would rent out my apartment, even when I'm actually living in it.
Luckily the amounts are based on rent prices as they were in 1975. It's indexed, which means it gets adjusted for (general) inflation, but not for the increased prices in the housing market which is much higher than inflation.
for landlords.
Not for the tax pot and the general good.
No not for landlords, for homeowners. As it is, it's just an unfair tax that increases the cost of homeownership, making it unattainable for lower incomes. If they wanted to target landlords, they should tax actual rent income instead.
Of course, no tax ever gets abolished because the government starts to rely on it in their budget, so we'll be stuck with this forever.
Cool!!!!! i love incentivizing the use of housing as an asset to store money!!!! Fuck!!!!
I think it should just be illegal to not rent out real estate. People shouldn't be allowed to just park money in housing.
"You shouldn't be allowed to own something and use it for any purpose that you want, just because you bought and own it"
The fuck.
Can't drive a car without a license, rules around usage of things you own are pretty standard.
I can still buy a car and have it just sit there. The driving part is due to affliction of other people's well being. Me raising the money to buy a house and deciding I want it as a summer stay location, so I leave it sitting there while I'm somewhere else would have no harm on another's life.
So lets turn it into the extreme.
Say you are so rich, you buy every house on the planet. Which you will use as your summer/autumn/winter/spring stay locations.
Would that still not harm on another's life?
There are also rules for where, when, and how long you can have your car sit somewhere, including your own yard in some places.
I believe that you should be able to keep a property empty if you choose, it should just be taxed in a way that's proportionate to the damage it causes to the community.
Empty properties inflate housing costs -> Increased housing costs reduce the amount of people willing to live in the area -> Which reduces the amount of people able to work for local businesses.
Should someone be allowed to buy all the freshwater lakes around a major city and then not sell the water for people to drink?
Nestle vibes
They could now if they wanted. Most lakes are government or private property. You think they'd want to lose profit margin?
Not to mention the massive difference again, the wellbeing of other people. Houses are crafted by skilled workers, it's not a right to their labor, nor a right to the owner's property who purchased it after it was built. You do however have a naturalized right to survival.
The point is, property taxes are fine but saying "um you should be forced by the government to use something you own in a specific manner" is nonsensical and authoritarian overreach at minimum.
Why not? I own a house and I want to keep it to myself. I don't want to deal with problematic tenants.
How many days is a homeowner allowed to be away from home? How does a government keep track of this without violating people's right to privacy?
183 days. You self-declare unless the government has a reason to audit. This is a solved problem already and we've been going by these standards for decades.
It's called establishing a domicile in tax terminology.
The government knows where you live. It is on your ID.
You can only have one address on your ID. So they know where you don't live.
It's not on my ID, though. And even if it were, they'd need a way to monitor actual occupancy over time and there's no way that wouldn't be invasive.
It's common and reasonable to be away from home for months at a time, and you have a right to travel. I can only imagine the burden this would place on someone who's away for medical treatment or supporting a distant family member. Or just out of the house for renovations or an issue they can't afford to fix currently.
The administrative burden alone would be huge before you get to unintended consequences.
Sounds like a typical Nazi...
Did you know that Hitler also drank water???
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Many landlords don’t even pay taxes on the money they DO make.
They can depreciate a property to offset their income, even though the property is going up in value. The catch is that they have to pay taxes on more of the money they get from selling the property. But if they don’t sell, potentially no taxes for decades. And if they leave it to their kids in their will, no taxes there either and the kid’s cost basis in the property is the market value at the time they received it. So they can start the depreciation all over again.
This is how my non-expert self understands it anyway. It’s part of what draws some people into real estate.
More than that. You can depreciate the building (but not the land) to offset tax on the income but the bill eventually comes due because by depreciating it you're lowering your cost basis. For example you buy a property for $150k. If you depreciate it long enough it's worth $0. If you then sell it for $350k you have to pay tax on all $350k, not just the $200k gain in value.
However If you intend to use the proceeds from that sale to buy another investment property or properties you can do a 1031 exchange to roll your adjusted basis into the new property. Thus even when you sell it you don't have to pay the tax.
As you might, expect tax laws are written to benefit constituencies that politicians value highly. Wealthy donors are among those constituencies.
Once the property is fully depreciated, the trick is to do a 1031 exchange to buy a new one, and then you can depreciate the new one.
No. Landlords should be able to do with their property what they want.
No seconds until everyone has a plate. We all learned it as kids. Now let's do that with housing.
Fuck their capital. They don't deserve it. Take the empty houses and give them outright to those that need them. There are more empty homes in the US than unhoused people.
Those empty houses are largely in places where people do not want to live. If you look at markets where people actually live, it's a pretty different picture. A shack in the middle of the field in Nebraska does not help a homeless man in Manhattan (and he almost certainly wouldn't take it if you offered it for free).
The maoist uprising against the landlords was the largest and most comprehensive proletarian revolution in history, and led to almost totally-equal redistribution of land among the peasantry.
Bring on the tanks.
The unemployed should have to pay income tax on the income they would earn if they were employed