13 ms·

It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % o

by brc 11y ago

It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % of the sale price. This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). Furthermore, the state government has unpredictable revenue streams based on the ups and downs of the property market (you can have high prices but low volume) and the labor market is more calcified because people are unlikely to sell and move to access a new job. The result is tightly held real estate, variable state government revenue and ever-higher prices. Adding fuel to the mess is a universal belief by local governments that housing development is evil and must be curtailed, so they concentrate on high density and infill development, which drives the prices of stand alone property ever higher. Unsurprisingly, Australia just about outpaces Canada for the most severely unaffordable housing market. And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply.

fleitz 11y ago
Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing) It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.
- CountSessine 11y ago
  Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. This is new - has the owner said that multiple families will live in that house? It's stupid to expect to be able to live in detached housing in a world class city Since when did Vancouver become a world class city? I don't mean that to be cruel; I live here myself. But Vancouver has neither the culture nor the power nor the money to be considered world class. The people are poor, the economy has a paucity of opportunities, and now the housing really is only marginally affordable, even if you go out somewhere crazy far like White Rock.
  - fleitz 11y ago
    To be fair I agree with you on most of those points, however, Vancouver seems to think it's world class when really its quite provincial.
- Grishnakh 11y ago
  >The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities. What are you comparing to? Here in the US, it's exactly the same. Every single "big city" is really a metro area with a core city that bears the famous name, and a slew of separate cities bordering it. "Phoenix" for instance is a collection of a bunch of cities: Phoenix, Mesa, Tempe, Chandler, Glendale, Scottsdale, Gilbert, Paradise Valley, Sun City, Peoria, etc. "Los Angeles" has more cities than I can count. "New York City" is a little more centralized (since the city annexed a bunch of the bordering cities back in the late 1800s, turning them into "boroughs"), but still has White Plains, Tarrytown, and cities in bordering states like Stamford, Jersey City, Newark, Bayonne, etc. Maybe European cities are singular like that, but not here in the US.
CountSessine 11y ago
And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply. I think that this is the other dimension to the Vancouver housing problem that no one is talking about yet. Vancouver is separated from the rest of the province by the Fraser river to the south-east, and regional development policy for about 30 years has been fashioned to make it difficult for anyone to live south of the Fraser. If we put more bridges across the Fraser and built more highways, I think most of this problem would go away on its own.
- vkou 11y ago
  Where will those highways feed into? Business district roadways north of the Fraser are close to saturation.
  - CountSessine 11y ago
    At this point they need to be widened and expanded. What I'm advocating isn't simply a one-off highway and bridge expansion; rather I want the regional development plan scrapped and I want a new one that no longer treats Richmond/Delta/Surrey as a separate development region. Rather than fighting and antagonizing families who want to live south of the Fraser, we should try to integrate Delta and Surrey more completely with Vancouver and Burquitlam. Highways to bring people to their jobs in Vancouver, yes; but also a focus on encouraging businesses, perhaps through preferential taxes, to locate in Delta and Surrey. We should be planning, zoning, and developing to minimize the presence of the Fraser. That would include more bridges, but it would also include more mass transit. And if we need to pay for this somehow, I can't think of a better way than a non-linear property tax on everyone west of Cambie. ;-)
- hollerith 11y ago
  Isn't most of the land sourth of the Fraser prone to flooding?
  - allannienhuis 11y ago
JoshTriplett 11y ago
This sounds like an excellent argument for getting rid of property taxes altogether. Property taxes have some major fundamental problems, not least of which that using them to pay for local services tends to make such services better in more affluent areas and worse in less affluent areas. They produce potentially unbounded and unexpected expenses long after paying off the house itself (which impacts retirees and others trying to predict future expenses). And on top of that, as mentioned in the comments here, attempts to control the growth of property taxes can create major supply issues in the housing market. So why not get rid of property taxes altogether? Most states/countries already have either income tax, sales tax, or both. Why not settle on one tax, either income or sales, and use that for all government expenses?
- toyg 11y ago
  You are proposing to remove taxation on a bull market (property)? This would inflate prices even more, as investors make a run for nice tax-free properties. It doesn't make sense, sorry. You need to remove incentives to invest in property altogether. It's one of the worst and most unproductive markets, and not even a market in practice because everyone needs a home. My personal pope-emperor utopia would forbid companies from owning residential buildings, and tax individuals 10% of house value yearly on any house (with the first two exempted). Redevelopment should be allowed only when the area is in clear state of abandon, with strict rules on the amount of commercial space that can replace residential space. The property market needs to die -- and I say that as a homeowner.
  - JoshTriplett 11y ago
    I'm talking about taxes on personal residences, used as residences. I don't particularly want to argue in this post about what taxes might apply to second/third/fourth/investment/etc houses, or about the desirability of using excise taxes to control behavior. In the context of property used as a residence, I'm suggesting that property taxes produce undesirable effects, and that other forms of taxation might potentially work better.
    - 11y ago
ScottBurson 11y ago
> This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). I don't understand. When you're making millions on the sale of the property, how is 100k in stamp duty a problem? It's on the same order as your agent's commission!
- toyg 11y ago
  It's not a problem, but it's a nice excuse to hold on that sweet investment and let the kids worry about it after you're gone.
  - pm24601 11y ago
    If it is an excuse, then it doesn't matter. Someone looking for an excuse will always find one.
- iofj 11y ago
  Why isn't every house incorporated (bought by a company, then have that company bought/sold instead of the house) ? Note: this is how it's done for a lot of houses in western europe, and there it's a 100% legal way to avoid this tax. The problem is that you're going to have to pay 30% company tax on profits, and it's hard to get a mortgage. However this can always be structured so there aren't any profits (e.g. by improving the house, saving up for another house, ...)
  - eru 11y ago
    Your primary owner-occupied residence is exempt from capital gains tax in Australia. If you put a corporation in the middle, that exemption might vanish? (I don't know too much about the legal shenanigans here.)
    - throweway 11y ago
      Correct plus you have corp fees and i dont think you can negative gear (claim losses aginst personal income tax) either if you decide to rent it out.
goatforce5 11y ago
Aren't 'council rates' just a different name for 'property tax'? http://www.cityofsydney.nsw.gov.au/live/residents/rates http://www.cityofsydney.nsw.gov.au/live/residents/rates
- iofj 11y ago
  Technically they're additional property tax.
eru 11y ago
If only they would do high density! They could easily knock down all the small houses in eg Glebe and replace them with a few high rise condos.
throweway 11y ago
Add to this the pension eligibility means test excludes your primary residence. So if you sell your house to help fund your retirement then it is duely punished by missing out on money from the government. Much better to refinance the house and live of that. Hence more tightly held homes.

by brc 11y ago

fleitz 11y ago

Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. We have a low interest rate fuelled asset bubble and 1%'ers are complaining that they can't afford detached housing in Vancouver, never realizing that if everyone in Vancouver live in detached housing we'd need 150% of the available land in Vancouver (like no roads, offices, parks, pools, etc just detached housing) It's stupid to expect to be able to live in detached housing in a world class city. The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities.

CountSessine 11y ago
Its the exact same thing here in Vancouver, there are even protests because someone is going to tear down a small house that fits one family and build a bigger house on the same property that fits multiple families. This is new - has the owner said that multiple families will live in that house? It's stupid to expect to be able to live in detached housing in a world class city Since when did Vancouver become a world class city? I don't mean that to be cruel; I live here myself. But Vancouver has neither the culture nor the power nor the money to be considered world class. The people are poor, the economy has a paucity of opportunities, and now the housing really is only marginally affordable, even if you go out somewhere crazy far like White Rock.
- fleitz 11y ago
  To be fair I agree with you on most of those points, however, Vancouver seems to think it's world class when really its quite provincial.
Grishnakh 11y ago
>The other thing is that Vancouver isn't really a 'city' in the way that many others are, the 'burbs are separate cities so we get this 'most unaffordable' label when its really much better than many other cities. What are you comparing to? Here in the US, it's exactly the same. Every single "big city" is really a metro area with a core city that bears the famous name, and a slew of separate cities bordering it. "Phoenix" for instance is a collection of a bunch of cities: Phoenix, Mesa, Tempe, Chandler, Glendale, Scottsdale, Gilbert, Paradise Valley, Sun City, Peoria, etc. "Los Angeles" has more cities than I can count. "New York City" is a little more centralized (since the city annexed a bunch of the bordering cities back in the late 1800s, turning them into "boroughs"), but still has White Plains, Tarrytown, and cities in bordering states like Stamford, Jersey City, Newark, Bayonne, etc. Maybe European cities are singular like that, but not here in the US.

CountSessine 11y ago

And yet if you ask the average person in the street, they will blame 'interest rates' or 'Chinese buyers', and not once look at the ridiculous blockage on supply. I think that this is the other dimension to the Vancouver housing problem that no one is talking about yet. Vancouver is separated from the rest of the province by the Fraser river to the south-east, and regional development policy for about 30 years has been fashioned to make it difficult for anyone to live south of the Fraser. If we put more bridges across the Fraser and built more highways, I think most of this problem would go away on its own.

vkou 11y ago
Where will those highways feed into? Business district roadways north of the Fraser are close to saturation.
- CountSessine 11y ago
  At this point they need to be widened and expanded. What I'm advocating isn't simply a one-off highway and bridge expansion; rather I want the regional development plan scrapped and I want a new one that no longer treats Richmond/Delta/Surrey as a separate development region. Rather than fighting and antagonizing families who want to live south of the Fraser, we should try to integrate Delta and Surrey more completely with Vancouver and Burquitlam. Highways to bring people to their jobs in Vancouver, yes; but also a focus on encouraging businesses, perhaps through preferential taxes, to locate in Delta and Surrey. We should be planning, zoning, and developing to minimize the presence of the Fraser. That would include more bridges, but it would also include more mass transit. And if we need to pay for this somehow, I can't think of a better way than a non-linear property tax on everyone west of Cambie. ;-)
hollerith 11y ago
Isn't most of the land sourth of the Fraser prone to flooding?
- allannienhuis 11y ago

JoshTriplett 11y ago

This sounds like an excellent argument for getting rid of property taxes altogether. Property taxes have some major fundamental problems, not least of which that using them to pay for local services tends to make such services better in more affluent areas and worse in less affluent areas. They produce potentially unbounded and unexpected expenses long after paying off the house itself (which impacts retirees and others trying to predict future expenses). And on top of that, as mentioned in the comments here, attempts to control the growth of property taxes can create major supply issues in the housing market. So why not get rid of property taxes altogether? Most states/countries already have either income tax, sales tax, or both. Why not settle on one tax, either income or sales, and use that for all government expenses?

toyg 11y ago
You are proposing to remove taxation on a bull market (property)? This would inflate prices even more, as investors make a run for nice tax-free properties. It doesn't make sense, sorry. You need to remove incentives to invest in property altogether. It's one of the worst and most unproductive markets, and not even a market in practice because everyone needs a home. My personal pope-emperor utopia would forbid companies from owning residential buildings, and tax individuals 10% of house value yearly on any house (with the first two exempted). Redevelopment should be allowed only when the area is in clear state of abandon, with strict rules on the amount of commercial space that can replace residential space. The property market needs to die -- and I say that as a homeowner.
- JoshTriplett 11y ago
  I'm talking about taxes on personal residences, used as residences. I don't particularly want to argue in this post about what taxes might apply to second/third/fourth/investment/etc houses, or about the desirability of using excise taxes to control behavior. In the context of property used as a residence, I'm suggesting that property taxes produce undesirable effects, and that other forms of taxation might potentially work better.
  - 11y ago

ScottBurson 11y ago

> This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). I don't understand. When you're making millions on the sale of the property, how is 100k in stamp duty a problem? It's on the same order as your agent's commission!

toyg 11y ago
It's not a problem, but it's a nice excuse to hold on that sweet investment and let the kids worry about it after you're gone.
- pm24601 11y ago
  If it is an excuse, then it doesn't matter. Someone looking for an excuse will always find one.
iofj 11y ago
Why isn't every house incorporated (bought by a company, then have that company bought/sold instead of the house) ? Note: this is how it's done for a lot of houses in western europe, and there it's a 100% legal way to avoid this tax. The problem is that you're going to have to pay 30% company tax on profits, and it's hard to get a mortgage. However this can always be structured so there aren't any profits (e.g. by improving the house, saving up for another house, ...)
- eru 11y ago
  Your primary owner-occupied residence is exempt from capital gains tax in Australia. If you put a corporation in the middle, that exemption might vanish? (I don't know too much about the legal shenanigans here.)
  - throweway 11y ago
    Correct plus you have corp fees and i dont think you can negative gear (claim losses aginst personal income tax) either if you decide to rent it out.

goatforce5 11y ago

Aren't 'council rates' just a different name for 'property tax'? http://www.cityofsydney.nsw.gov.au/live/residents/rates http://www.cityofsydney.nsw.gov.au/live/residents/rates

iofj 11y ago
Technically they're additional property tax.

eru 11y ago

If only they would do high density! They could easily knock down all the small houses in eg Glebe and replace them with a few high rise condos.

throweway 11y ago

Add to this the pension eligibility means test excludes your primary residence. So if you sell your house to help fund your retirement then it is duely punished by missing out on money from the government. Much better to refinance the house and live of that. Hence more tightly held homes.