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Home ownership is living. Property rental is a business with risks not present in just ownership and is not always profitable. Property taxes effect home owners

Home ownership is living. Property rental is a business with risks not present in just ownership and is not always profitable. Property taxes effect home owners and landlords just the same, except landlords have to pass those expenses into rental prices if they wish to be in the green. > If you want to tax the rich simply tax the rich - let's say 5% tax on any property over 1 000 000 USD. You must be in California where the taxes are weird. Everybody already pays much more than 5% where I live.

ajuc 6y ago
I'm in Poland :) I meant cumulatively. If you own 200 things worth 10 000 usd each you should still pay 5% for 100 of them. > Home ownership is living. If you really need to live in a million dollar house you should be able to pay for it. It's not living it's luxury.
- austincheney 6y ago
  I completely agree. Property taxes determine who can live where in my area more than any other factor including property price. There are pros and cons to that. For example if you want to turn a poor area into an incredibly wealthy area, cough cough Southlake, you raise the property taxes every year until poor people can no longer afford to live there and are forced to sell.
yellowapple 6y ago
> except landlords have to pass those expenses into rental prices if they wish to be in the green. Except they can't, because (barring artificial price ceilings like rent control) they're almost certainly already charging the optimal rent for maximum profit; if they could actually charge higher without losing money as a result, they already would have, property tax or no. The actual reason property tax increases rental prices is because it penalizes development, meaning developers are less likely to build denser housing, meaning less housing supply, meaning higher housing prices. That is what is happening when landlords hike up prices in response to property tax increases; they are responding to the shifting intersection of supply and demand. Replacing property tax (and every other tax, for that matter, but that's a good starting point) with a land value tax would alleviate this problem, since it inverts the penalties - namely, by penalizing those who don't develop, meaning developers are more likely to build denser housing, meaning more housing supply, meaning lower housing prices. In this case, landlords are locked in; they still have to respond to the shifting intersection of supply and demand in order to maximize profit, and in this case that intersection results in a lower optimal price point. Literally zero opportunity to price LVT into apartment rentals this way; any attempt to do so results in the landlord losing profit.
- austincheney 6y ago
  > if they could actually charge higher without losing money as a result, they already would have That’s not numerically correct. There are different market pressures on renters versus owners. A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property. If a property ends up in the red because either the landlord cannot charge high enough rents or cannot find tenants they can always not renew the lease and sell the property where they may still earn a profit. Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years.
  - yellowapple 6y ago
    > A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property. If there are no/insufficient renters able or willing to pay rent above some point, then that strongly implies what the actual value of that rental might be. So I'm failing to see where what I wrote would be "not numerically correct"; if anything, that only serves to demonstrate my point, no? > Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years. Seems more likely that the growth is in spite of the high property taxes, and that converting those property taxes into land value taxes would improve things further. Numerically-speaking, a general property tax does penalize development, since more development = more overall property value = more property tax; the rental demand might be sufficient to make it worthwhile to develop anyway (because the increased rental income exceeds the increased property tax), but it's still a hindrance in that equation. Contrast with LVT, where the tax is an active driver of development rather than being some minimum bar that not everyone will be see as worthwhile/profitable to hurdle.

ajuc 6y ago

I'm in Poland :) I meant cumulatively. If you own 200 things worth 10 000 usd each you should still pay 5% for 100 of them. > Home ownership is living. If you really need to live in a million dollar house you should be able to pay for it. It's not living it's luxury.

austincheney 6y ago
I completely agree. Property taxes determine who can live where in my area more than any other factor including property price. There are pros and cons to that. For example if you want to turn a poor area into an incredibly wealthy area, cough cough Southlake, you raise the property taxes every year until poor people can no longer afford to live there and are forced to sell.

yellowapple 6y ago

> except landlords have to pass those expenses into rental prices if they wish to be in the green. Except they can't, because (barring artificial price ceilings like rent control) they're almost certainly already charging the optimal rent for maximum profit; if they could actually charge higher without losing money as a result, they already would have, property tax or no. The actual reason property tax increases rental prices is because it penalizes development, meaning developers are less likely to build denser housing, meaning less housing supply, meaning higher housing prices. That is what is happening when landlords hike up prices in response to property tax increases; they are responding to the shifting intersection of supply and demand. Replacing property tax (and every other tax, for that matter, but that's a good starting point) with a land value tax would alleviate this problem, since it inverts the penalties - namely, by penalizing those who don't develop, meaning developers are more likely to build denser housing, meaning more housing supply, meaning lower housing prices. In this case, landlords are locked in; they still have to respond to the shifting intersection of supply and demand in order to maximize profit, and in this case that intersection results in a lower optimal price point. Literally zero opportunity to price LVT into apartment rentals this way; any attempt to do so results in the landlord losing profit.

austincheney 6y ago
> if they could actually charge higher without losing money as a result, they already would have That’s not numerically correct. There are different market pressures on renters versus owners. A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property. If a property ends up in the red because either the landlord cannot charge high enough rents or cannot find tenants they can always not renew the lease and sell the property where they may still earn a profit. Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years.
- yellowapple 6y ago
  > A landlord can only charge what a renter is capable of paying regardless of taxes or value on the property. If there are no/insufficient renters able or willing to pay rent above some point, then that strongly implies what the actual value of that rental might be. So I'm failing to see where what I wrote would be "not numerically correct"; if anything, that only serves to demonstrate my point, no? > Also, high property taxes do not penalize development. I live in an area with high property taxes and it’s one of the fastest growing areas in the country for the last 20 years. Seems more likely that the growth is in spite of the high property taxes, and that converting those property taxes into land value taxes would improve things further. Numerically-speaking, a general property tax does penalize development, since more development = more overall property value = more property tax; the rental demand might be sufficient to make it worthwhile to develop anyway (because the increased rental income exceeds the increased property tax), but it's still a hindrance in that equation. Contrast with LVT, where the tax is an active driver of development rather than being some minimum bar that not everyone will be see as worthwhile/profitable to hurdle.