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.
this post was submitted on 24 Aug 2023
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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.
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.
Multiple holder companies incoming. Now that will need to be plugged up.
Not saying this is a bad idea. But they will find loopholes.
- Require rental properties to be registered and report when vacant.
- Block any new single dwelling rental property purchases.
- Only allow more rental property purchases when vacancy rate is below a certain threshold in a metropolitan area.
Yeah, there was just recently a big scandal in my city where one guy bought 20 houses with 9 shell companies. Attempted to do shitty flipping jobs. Selling the houses from one company to the next so they didn't immediately jump up in price in the real estate history.
The sad part is: if he hadn't overpriced the market and sold more of them he would've gotten away with it, but he waited too long and got stuck. But until that point nobody knew one guy had 20 houses, it was 2 per company on paper.
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.
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.
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?
Why should it be anything but a personal investment?
What do mean? I don't see how what I said negates that.
Isn't it better for everyone to decommodify housing?
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.
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
What should people invest in then?
Literally any other type of business.
How is land ownership handled?
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.
Literally any other type of business
You've just eliminated perhaps the safest, most attainable method for the average person to achieve passive income.
Owning land for personal use
Other than living on it, why would someone want to own land?
You’ve just eliminated perhaps the safest, most attainable method for the average person to achieve passive income.
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.
Other than living on it, why would someone want to own land?
To use it for a business or enjoyment. I'm not sure where you are going with this.
To use it for a business
This is wealth extraction
Or enjoyment
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?
This is wealth extraction
Yup. I'm ok with some kinds, just not the kind that fucks over the creation/distribution of basic necessities.
So you’re okay with some rich person owning acreage as long as it’s for their own enjoyment
Yeah that's bullshit too and shouldn't be allowed. Even for personal use/enjoyment there should be a hard limit.
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?
That's bullshit too.
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You’ve just eliminated perhaps the safest, most attainable method for the average person to achieve passive income.
And? Should we be trying to help people earn income for doing dick all?
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.
it can take 30 years to pay it off.
It can take 30 years for the tenants to pay it off. Landlords aren't paying for that out of the goodness of their hearts. It's instead ultimately the tenants.
Throughout all that time they are responsible for maintenance, insurance and a litany of other things to keep it from falling into disrepair.
They hire people to do that, they don't do it themselves.
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Real estate should be considered an investment.
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?
Because you want a nice house to live in?
Building should be profitable, owning should be of limited profitability.
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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.
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.
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.
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.
Raise the property tax, exemption for owner occupied, then tax the rest.
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.
They don’t? They do where I live. Property tax is real in Michigan.
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 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.
Luckily
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.
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.
Wow they don't????? Cool!!!!! i love incentivizing the use of housing as an asset to store money!!!! Fuck!!!!
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).
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