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L.A. council members propose taxing landlords who leave homes vacant
- teej 7y agoI thought Toronto passed this years ago and proved that it makes effectively no difference?
- victor9000 7y agoWhy did it make no difference?
- gruez 7y agosource?
- itsaidpens 7y agoIt has made a dramatic difference in Vancouver.
- ncmncm 7y agoVancouver did; and now you can rent a Chinese gangster-owned McMansion there for $1000 a month.
- pbiggar 7y agoWonderful. Homes are for people to live in. Related: http://cityobservatory.org/housing-cant-be-affordable_and_be-a-good-investment/ http://cityobservatory.org/housing-cant-be-affordable_and_be...
- Jerry2 7y agoHas any city tried taxing short-term rentals at a higher rate?
- hanniabu 7y agokind of comes naturally when shorter leases have higher rates
- shereadsthenews 7y agoThat's only right if you tax rent, which LA does not.
- rockinghigh 7y agoCalifornia does. It’s taxed as income.
- gnopgnip 7y agoMany cities have a hotel tax, and require short term rentals to pay this.
- writepub 7y agoAffordable housing (and rent) is an issue, but this isn't a well thought out solution for the same. The assumption of malice on the home owner for leaving a home vacant is unfair. If the state wants to impose such a tax, proving malice should be the state's burden. Otherwise, it's a breach of the right to property enshrined in the Constitution.
- writepub 7y agoI understand the knee jerk reaction of HN to downvote, but a counterpoint, especially one explaining the Constitutionality of this proposal would be helpful
- zimpenfish 7y ago'a person may not be deprived of property by the government without “due process of law,” or fair procedures' I'm obviously not a Constitutional Scholar but how does this a) deprive people of property (it's just taxing empty ones) and b) not come under 'due process of law' (will be voted on by the public)? Also can't see how it falls under "eminent domain" since the Government isn't seizing these properties - you can still have an empty property, you just can't do it consequence-free.
- writepub 7y agoThis proposal is the equivalent of "there's x% unemployment, and 100,000 open jobs. If you insist on not filling those jobs, we'll tax you" There might be numerous reasons for the vacancy, but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference. Everything else is the government imposing what one does with their private property, which is overstepping it's jurisdiction, especially when the property's use is fully compliant with decades old law
- zimpenfish 7y ago> but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference. to you. > Everything else is the government imposing what one does with their private property But they already do that with "decades old law" - e.g. you (probably) can't run a brothel from your private property in LA. Why is this such a different restriction?
- shereadsthenews 7y agoHow about if Prop 13 just doesn't apply to homes except one's primary residence?
- jnordwick 7y agoThis is the simplest solution while still keeping the benefits of prop 13. People seem to forget that it was intended to prevent forcing people to move because the had capital appreciation but no income growth, and this disproportionately affected low and fixed income families.
- inferiorhuman 7y agoNah it was sold as keeping granny in her home, but the intent was to destroy government.
- tomcam 7y agoMind backing that up?
- inferiorhuman 7y agoHoward Jarvis, the author of Prop 13, was a well known anti-government lunatic.
- threezero 7y agoProp 13 was actually intended to make Howard Jarvis and his friends at the Apartment Owners Association even wealthier. He did a great job of selling a tax scam to the public. A property tax law designed to benefit low income families would only have lowered property taxes for primary residences, not for places like the Los Angeles Country Club that pays $200k a year in property taxes on 313 acres of prime land.
- jnordwick 7y agoProp 13 opponents always sound unhinged.
- ryandrake 7y agoExcellent. But this should not just be for "landlords." It should also be for anyone who buys a property and then just holds on to it vacant, waiting for it to appreciate as if it's a bar of gold. Every vacant home is essentially a theft from someone else who has no home or is priced out of the market. I say for any home that is unoccupied 180 days or more per year : 1. Remove the property's Prop 13 protection, ratcheting the assessed value of the home up to its actual market value. 2. Double the resulting property tax. 3. Remove the owner's ability to deduct any mortgage interest on that property from their income taxes.
- benj111 7y agoHow do you differentiate between a landlord of an empty house, and a speculator with an empty house? Attempting to would introduce an unnecessary loophole, as the stated aim would seem to include speculators with empty houses.
- ryandrake 7y agoI'm specifically saying don't distinguish. The public should strongly incentivize against leaving houses vacant, whether you're a landlord without a tenant, a speculator with an empty house, or some rich dude with 50 houses he visits for a week per year.
- icelancer 7y ago>> Every vacant home is essentially a theft from someone else who has no home or is priced out of the market. If you are correct, then the thief is not the private owner. It is the government that refuses to make it easier to build more houses.
- steve-s 7y agoWell, I don't know which "solution" is more utopian. Land is not infinite.
- netheril96 7y ago
- chrisco255 7y agoAh, the logic of progressivism. These "vacant" homes are already taxed at whatever millage rate is set in Los Angeles...I'm presuming it's more than zero. Furthermore, investment homes do not get tax exemptions, so they're already taxed at higher rates than primary homes. Finally, this is unenforceable without weekly spying to determine if a home is occupied or not. In other words it will cost more to enforce, is potentially a violation of the 4th amendment, and will do nothing to fix homelessness. California needs to revamp zoning laws and fix the mess that those laws created.
- onion2k 7y agoFinally, this is unenforceable without weekly spying to determine if a home is occupied or not. Just ask the utility companies how much electricity and water are being used. No spying required.
- fiter 7y agoWhat do you think will be more expensive: wasted water and electricity or this proposed tax?
- reallydontask 7y agoIn this country (UK), stamp duty land (the tax you pay when you buy a new house) is higher if you are buying a house that won't be your main residence, so taxing vacant homes is, in principle, a workable tax policy. I'm sure there would be people that would try to work around the system, same as with every other law.
- TheOtherHobbes 7y agoWhat do you think would be more expensive: a criminal conviction for fraudulently disguising property status, or this tax?
- chrisco255 7y agoThere's nothing criminal about owning a second house and using electricity. Maybe there's staff members keeping it clean. Maybe there's a pool pump that needs to run. You completely ignore the spectrum of utility consumption for completely vacant, minimally occupied, half occupied, etc. homes that exist on the market.
- zhoujianfu 7y agoWhat about just allowing developers to build as much housing as the market will bear?
- reallydontask 7y agoAre you advocating the removal of zoning provisions at all?
- zhoujianfu 7y agoNot really, but I guess sort of... I think it’d be fine. Maybe it’s because my family moved every 2-3 years my whole childhood, but I don’t think it’s your right to live somewhere forever just because you live there now. If there were no zoning laws, people could always move if they don’t like how the free market is changing their neighborhood. And housing would always be “affordable”.
- reallydontask 7y ago> If there were no zoning laws, people could always move if they don’t like how the free market is changing their neighborhood. And housing would always be “affordable”. I think this is a very optimistic view of what would happen. Zoning laws are not perfect but without them there would be a race to the bottom and the public left to pay for the externalities. edit: I might be wrong on this but I think that Victorian England kind of points towards what would happen I know it's not 100% applicable but ...
- pwinnski 7y agoHouston, Texas, has minimal zoning laws, and I don't know if that has led to a race to the bottom. http://blog.urbanleasing.com/five-ways-houstons-lack-of-zoning-affects-city-life/ http://blog.urbanleasing.com/five-ways-houstons-lack-of-zoni...
- orev 7y agoHow would you like to have bought a house, and then have the two houses next to you bought, torn down, and turned into a gas station? That’s going to kill both your immediate quality of life and your property value. Because that’s what no zoning laws get you — just take a look at Houston TX where this already happens.
- mullingitover 7y agoSeems lazy for the author of the article to fail to mention any hard numbers for the actual vacancy rate. Without that context it's hard to judge whether this is meaningless grandstanding by the city council or determined problem-solving. The real problem with homelessness in LA is that the street camping isn't being rolled back now that the terms of the 2007 settlement with the ACLU have been fulfilled. Instead the slums are being normalized. Shelters aren't even full. It makes homelessness an increasing lifestyle choice at a time when unemployment is reaching multi-decade lows. We need to put a permanent hard ban on street camping and work backwards from that to handle the humanitarian needs of the population.
- threezero 7y agoShelters in LA have waiting lists, and Section 8 housing has 37,000 families on waiting lists. Sounds like it’s not a “lifestyle choice” for a lot of people.
- mullingitover 7y ago> Reviews conducted at 60 shelters funded by LAHSA last year found more than half -- 33 -- were not filling all of their beds. Overall, LAHSA-funded shelters had a 78 percent utilization rate, well below the 90 percent required in their contracts. https://www.kqed.org/news/11668623/why-do-thousands-of-l-a-s-homeless-shelter-beds-sit-empty-each-night-rats-roaches-bedbugs-mold https://www.kqed.org/news/11668623/why-do-thousands-of-l-a-s...
- tway111 7y agoThe USA discovering socialism, always a sight to behold. I hope this time it's the real and true socialism, not the bad kind of socialism that fails every time the minute you run out other people's money.
- known 7y agoLondon does that
- xondono 7y agoThere’s an important point missing not only in this article but on most conversations on this topic (we had similar proposals in Barcelona), and it’s how long is the mean vacant time. Given the size of LA, it’s not unlikely that 100k homes is the result of the normal dynamic equilibrium of the city, in other words, these 100k homes are not the same as two months ago, even if the number is quite stable. My feeling is that these taxes will achieve nothing, and might even raise the cost of rentals, pricing out even more people.
- wallace_f 7y agoLA towes away homeless people's tiny homes(1). Maybe after another several trillion spent on the war on poverty, drugs and terrorism we will wake up to what's happening here. 1- https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-seized-20160224-story.html https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-sei...
- imtringued 7y agoThose "wars" aren't meant to be solutions. They are just a way to embezzle money in a way that is politically acceptable and a way to remove poor and mentally ill people from the public instead of helping them. War on poverty? Just give them a house and food. War on drugs? Just let a doctor administer a safe dose that doesn't make them high. War on Terrorism? Fund their education system and foster good relationships with those countries instead of bombing them. There are obvious reasons why those solutions haven't been implemented: the population is happy with the way things are going.
- praptak 7y agoTaxing empty property feels like a treatment for symptom rather than the cause. Maybe it would be better if the tax on the land value would be high enough so that it does not make economical sense to keep properties vacant?
- ivalm 7y agoBut at the same time you don't want to squeeze people who have lived in a particular location for a long time simply because the neighborhood is gentrifying. One proposal that I liked more than the LA proposal is to simply tax additionally properties that are not someone's primary residences (checked against address on the California tax, for example).
- imtringued 7y agoIf only the land were taxed then people can simply move from overpriced single family homes into denser construction to amortize the land tax over multiple units.
- ryandrake 7y agoIf only land were taxed, single family homes would probably not even exist. They'd all eventually be torn down and replaced with apartment buildings as dense as the law allowed. Not a great consequence either. The need for city services (which property taxes fund) tends to scale more with population size, than with land area.
- ToFab123 7y agoI Denmark there are so many difference taxes. The most unfair of them all is "lejeværdi af egen bolig" which directly translates to "Rental value of your own house". Short version. Had you chosen to rent out your house to someone else instead of living there yourself, you would have made a profit". You have to pay taxes on that value. "But, hey stop wait a minute", you might say. "I am not renting out my house. I am actually living there all by myself." Well sorry, that is irrelevant. You still have to pay taxes of that imaginary profit regardless if you live there or not. The tax rule (in Danish) https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm WTF? Yes, WTF but true.
- jacquesm 7y agoSame in NL: Huurwaardeforfait.
- reallydontask 7y agois this on top of property taxes? What's the rationale?
- averros 7y agoPoliticos and their big business pals want to steal more of their subject's money. That's more than sufficient rationale for them. In fact, every other "rationale" for taxes is B.S.
- yonran 7y agoLandlords have to pay income tax on the rent. If owner-occupiers didn’t pay tax on the imputed rent, then the owner-occupier would pay a lower income tax than the landlord+renter. In effect, the implicit tax deduction that owner-occupiers get on imputed rent in US Income Taxes is a regressive tax on the renter+landlord. See also this explanation: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation
- 7y ago
- yonran 7y agoIt makes sense to tax homeowners who leave their units vacant, since their decision to keep scarce property off the market is a waste that exacerbates the housing crisis. The same applies to landowners who leave land vacant or underdeveloped when they could develop it into an apartment that alleviates the housing crisis. It also makes sense to tax landlords who charge market rents. While tenants suffer from the shortage, it is landlords who reap unearned windfalls. While vacant property owners waste value every month that could benefit society, landlords capture that value for themselves, so the city should take a cut. And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords. If we combine these 4 taxes, we would have a pretty good system for encouraging vacant landowners to use their land efficiently while also raising revenue from the landlords who benefit from the crisis. But then we would realize that the simpler solution is a higher, fairer property tax to begin with (by repealing Proposition 13).
- TeMPOraL 7y ago> And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords. Never understood that part. Why would we want to "remove the inequality between owner-occupiers and landlords"? What inequality anyway, since landlords often already are owner-occupiers themselves, with extra properties they rent out?
- yonran 7y agoAs this Vox article explains[1], if rent is taxed but imputed rent is not, then a homeowner would pay no tax, but if he and his neighbor decided to rent their house to each other (with zero net change in income after rent), then he would pay the tax as a landlord. The decision to exclude imputed rent in US Income Taxes was apparently a decision of the Treasury in designing the first Form 1040 for 1913 despite economists’ arguments for including it in the tax[2]. In US income taxes, the inequality exists to this day. Owner-occupiers get to keep their rental income without paying taxes that landlords would have to pay (though landlords get to deduct maintenance), in effect taxing poorer renters at a higher rate than wealthier homeowners. When someone buys a house instead of renting, he gets an implicit tax deduction on the imputed rent that renters+landlords aren’t allowed to take. So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same. [1]: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation [2]: Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008 https://doi.org/10.1017/9781108377157.008