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In the US, you can deduct your mortgage interest and pocket 100% of your profit upon sale. In a place like California with property tax assessments frozen upon

In the US, you can deduct your mortgage interest and pocket 100% of your profit upon sale. In a place like California with property tax assessments frozen upon purchase, the explosion of housing prices is pure tax-free upside. You don’t get that kind of deal from stocks or bonds. So people pay more than they otherwise would for houses, and are more incentivized than they otherwise would be to keep housing prices high. As a side effect, municipal tax revenues don’t scale with the now-inflated costs of provisioning municipal services. My larger point is that either a) your house is an investment, so your returns come with social responsibilities, or b) your house is not an investment, so you’re not entitled to returns beyond having a place to live. The current regime, where you can make tax-free millions for being in the right place at the right time, is not a good one.

esotericn 8y ago
> your house is not an investment, so you’re not entitled to returns beyond having a place to live. The current regime, where you can make tax-free millions for being in the right place at the right time, is not a good one. I agree with this. In the UK - as earlier stated, we don't have property tax. No capital gains tax is charged on disposal of a primary residence. The CGT situation makes sense in the event that the entirety of the gain is re-invested in another home. Otherwise, you end up in the absurd situation in which a person moving between two identical homes on the same street would take a loss of 20%, incentivising them to never move. It might make sense to require that the proceeds of the sale be put towards another primary private residence (and have anything left over taxed). It seems to me like that's not really your issue though. > As a side effect, municipal tax revenues don’t scale with the now-inflated costs of provisioning municipal services. This is a question of overall taxation, no? It's not relevant whether the money comes from a property tax on everyone, or an income tax on those that are of working age, or a general wealth tax, or corporation tax, or whatever else - it just needs to be paid for. Again, I'm assuming here, but I think your argument is that increasing property taxes would decrease the cost of property. It's pretty obvious that this is the case because it's effectively turning homeownership into a 'shared ownership' scenario whereby you pay rent to the state.

esotericn 8y ago

> your house is not an investment, so you’re not entitled to returns beyond having a place to live. The current regime, where you can make tax-free millions for being in the right place at the right time, is not a good one. I agree with this. In the UK - as earlier stated, we don't have property tax. No capital gains tax is charged on disposal of a primary residence. The CGT situation makes sense in the event that the entirety of the gain is re-invested in another home. Otherwise, you end up in the absurd situation in which a person moving between two identical homes on the same street would take a loss of 20%, incentivising them to never move. It might make sense to require that the proceeds of the sale be put towards another primary private residence (and have anything left over taxed). It seems to me like that's not really your issue though. > As a side effect, municipal tax revenues don’t scale with the now-inflated costs of provisioning municipal services. This is a question of overall taxation, no? It's not relevant whether the money comes from a property tax on everyone, or an income tax on those that are of working age, or a general wealth tax, or corporation tax, or whatever else - it just needs to be paid for. Again, I'm assuming here, but I think your argument is that increasing property taxes would decrease the cost of property. It's pretty obvious that this is the case because it's effectively turning homeownership into a 'shared ownership' scenario whereby you pay rent to the state.