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Because the real estate is being used as a value store for people moving money from overseas, engaging in money laundering, or as a hedge against other bets. On
by claudeganon 6y ago
Because the real estate is being used as a value store for people moving money from overseas, engaging in money laundering, or as a hedge against other bets. Once exchange value is given priority over use value in markets for things like housing, you run into all kinds of nonsensical arrangements and deleterious social consequences.
- novok 6y agoAnd that is why you need tax penalties such as long term unoccupied property taxes and non-resident investor taxes to counter incentivize such behavior.
- claudeganon 6y agoI’m skeptical that taxes themselves can resolve the problem. The people who engage in these tactics are already quite good at gaming them. Housing would have to revert to circumstances like Japan, where homes are largely a depreciating asset.
- throw737 6y agoReplace portion of income tax with simple property tax. No complicated stuff like "unoccupied property taxes and non-resident investor taxes".
- bobthepanda 6y agoEven better than property tax, land value tax. Charging tax on property (building + land) mostly just disincentivizes more intensive buildings.
- bluGill 6y agoThe land value should be taxed, but it isn't a simple answer. Large buildings imply more people which mean more use of city services. I'm not sure what the right answer is, but I am sure simple answers that would fit into a comment box here are wrong.
- bobthepanda 6y agoIf you want to tax things to cover the cost of more people then it makes more sense to tax the people.
- bluGill 6y agoYou obviously need to tax enough to cover the costs somehow. Tax is also incentive. You want to tax things you want to discourage more than things that you want to encourage.
- neutronicus 6y agoThey should be, shouldn't they? They're physical luxury goods that deteriorate as you use them, like cars. They appreciate largely because of nearby corporate and government investment (in office complices, schools, utilities). That people make money off of them suggests that the government isn't being nearly aggressive enough about capturing the value it's creating here.
- claudeganon 6y agoYes, I agree entirely. Removing socially necessary goods like food, housing, and healthcare from financialized speculation would resolve many that issues countries like the US face.
- Spooky23 6y agoIt is really weird. My home is a wood-frame house >100 years old. Although some aspects are better than new construction, it seems weird that the underwriting is basically the same as a new property given the term of the loan I just refinanced. Even insurance is almost the same! I can travel a mile down the road and due to a "bad" neighborhood, many properties are literally negative value. They sit till they burn because demolition is more costly than the value of the land. Markets don't price risk well. Housing markets definitely don't price capital investments or liabilities more than 5 years out well.
- eecc 6y agoWell, in NL you were allowed to squat a property if it was vacant for more that a certain amount of time. Then the local Liberals (Mark Rutte) outlawed squatting and it’s basically like the parent comment described.