4 ms·

The real q is, why does government even subsidizing home ownership in the first place?

sokoloff 9y ago
US business taxes are based income / profits. In order to do that, it's required to allow profit-seeking entities to deduct business expenses (such as raw materials, wages, etc.). Logically, interest and property taxes are business expenses for landlords, just as steel and electricity are business expenses for Ford. Then, there's a question of whether you want to have a level purchasing environment for prospective owner-occupants when they are bidding against a prospective landlord. (I believe that we do want to encourage owner-occupancy, at least to the extent that they are on equal footing with landlords.) Repealing the OO-MID (owner-occupied mortgage interest deduction) would mean that a landlord could literally pay more for a property than an owner-occupant and achieve the same long-run financial outcome, or pay the same and achieve a better outcome. This would amount to a subsidy to renters over owners. Providing a similar (now lessened) subsidy to owners serves to level, not tilt the playing field. If one believes that a nation of entirely renters is preferable or indifferent as compared to a mix of landlords and end users, then there is no valid purpose for the OO-MID. I believe there are community and public benefits to owner-occupancy and support the level playing field.
- tehlike 9y ago
  500k capital gains tax free income doesnt fit that. Why does a stock not have this exclusion, but a home ownership does? I get government incentives overall. I am just pointing to some reasons bubbles form.
  - sokoloff 9y ago
    That’s a fair question. I don’t support that exclusion, even though I stand to benefit the full amount if we were to sell today. (Obviously, if we sell, we’re taking the exemption, but I agree it’s bad policy.)
youpassbutter 9y ago
>The real q is, why does government even subsidizing home ownership in the first place? Firstly, older people own homes and they vote. Secondly, homes are a significant part of people's retirement assets. As companies do away with pensions and as the Social Security age gets increased, home values gain in importance. So the government has an incentive to keep home prices high. This hurts the younger generation looking to buy homes and raise a family. But the older generation votes in greater numbers than the younger people. If you are politician running for office, you aren't going to say "lets raise property taxes" or "lets get housing prices down so that young people can afford it".
- tehlike 9y ago
  It also causes nimby. You own a house you vote in your best interest and oppose new housing. Prop 13 is one big reasons, too.

US business taxes are based income / profits. In order to do that, it's required to allow profit-seeking entities to deduct business expenses (such as raw materials, wages, etc.). Logically, interest and property taxes are business expenses for landlords, just as steel and electricity are business expenses for Ford. Then, there's a question of whether you want to have a level purchasing environment for prospective owner-occupants when they are bidding against a prospective landlord. (I believe that we do want to encourage owner-occupancy, at least to the extent that they are on equal footing with landlords.) Repealing the OO-MID (owner-occupied mortgage interest deduction) would mean that a landlord could literally pay more for a property than an owner-occupant and achieve the same long-run financial outcome, or pay the same and achieve a better outcome. This would amount to a subsidy to renters over owners. Providing a similar (now lessened) subsidy to owners serves to level, not tilt the playing field. If one believes that a nation of entirely renters is preferable or indifferent as compared to a mix of landlords and end users, then there is no valid purpose for the OO-MID. I believe there are community and public benefits to owner-occupancy and support the level playing field.

tehlike 9y ago
500k capital gains tax free income doesnt fit that. Why does a stock not have this exclusion, but a home ownership does? I get government incentives overall. I am just pointing to some reasons bubbles form.
- sokoloff 9y ago
  That’s a fair question. I don’t support that exclusion, even though I stand to benefit the full amount if we were to sell today. (Obviously, if we sell, we’re taking the exemption, but I agree it’s bad policy.)

youpassbutter 9y ago

>The real q is, why does government even subsidizing home ownership in the first place? Firstly, older people own homes and they vote. Secondly, homes are a significant part of people's retirement assets. As companies do away with pensions and as the Social Security age gets increased, home values gain in importance. So the government has an incentive to keep home prices high. This hurts the younger generation looking to buy homes and raise a family. But the older generation votes in greater numbers than the younger people. If you are politician running for office, you aren't going to say "lets raise property taxes" or "lets get housing prices down so that young people can afford it".

tehlike 9y ago
It also causes nimby. You own a house you vote in your best interest and oppose new housing. Prop 13 is one big reasons, too.