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Also, I have to wonder if empty apartments held by investors as ‘safe deposit boxes’ will start to appear on the rental or sale markets if the value drops. And
by Finnucane 6y ago
Also, I have to wonder if empty apartments held by investors as ‘safe deposit boxes’ will start to appear on the rental or sale markets if the value drops.
And this will have an effect on new construction: if demand weakens, construction will drop off.
- slg 6y ago>Also, I have to wonder if empty apartments held by investors as ‘safe deposit boxes’ will start to appear on the rental or sale markets if the value drops. Cities are also making moves that might increase the chances of this. Los Angeles just took steps yesterday to put a vacancy tax on the November 2020 ballot.
- nemo44x 6y agoInteresting. I've read, however, that something like that is probably very easily unconstitutional and/or easy to get around. The bigger issue is that the tax code gives landlords incentive to not rent at "market value" and hold out for more money on a long term contract.
- Finnucane 6y agoWhy would it be unconstitutional? If cities can give tax breaks for a primary residence, and have a separate commercial tax rate, then why not taxes for unoccupied units? It's basically a financial investment. Tax the fuck out of it.
- gamblor956 6y agoIt is very easy to get around a vacancy tax: you rent it out so someone can live in it. They generally identify vacancy tax properties by looking for residential properties that aren't receiving utility bills or which have very low utility bills.
- JMTQp8lwXL 6y agoSo vacant rentals might turn into low-scale bitcoin mining facilities.
- gamblor956 6y agoUnlikely. You either wouldn't make enough to justify the power costs, or the investigators would assume you were running an illegal grow operation and refer your case to the police for investigation...which would result in them discovering the vacant property and imposing the vacancy tax plus any potential penalties for fraud, which might include a criminal case...
- Finnucane 6y agoIf you rent it out so someone can live in it, then it isn't vacant any more, that's the whole point of the tax.
- gamblor956 6y agoYes, that's generally how you get around a vacancy tax without spending more time and money on convoluted solutions to get around the tax, like buying furniture and setting up utilities and paying someone to periodically turn on the lights and run the water and pretend that they live there without actually living there. (This is actually a thing that people used to do when Vancouver introduced its vacancy tax.)
- Finnucane 6y agoYou're not really 'getting around the tax' when the intention of the tax is to give owners an incentive to rent or sell to an occupant. You're doing what the tax is trying to get you to do.
- chiefalchemist 6y agoI think you're both correct about the increase in supply. There is, of course, also the decrease in demand. It will be interesting to see if this affects home prices as well. I suppose it depends on how many single / two-family homes are rentals.
- Finnucane 6y agoAround here it seems like some listings are seeing price cuts, not huge, but some. And this of course should be peak selling time normally.