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My understanding is that housing is viewed as an inflation hedge. They’re buying those assets now on credit because they’re expecting elevated inflation over th
by wayoutthere 5y ago
My understanding is that housing is viewed as an inflation hedge. They’re buying those assets now on credit because they’re expecting elevated inflation over the medium term. Which means they’ll be able to raise and collect rent over that time, and likely sell at a profit.
This is a problem that many countries have solved by banning or heavily taxing ownership of housing by corporate and foreign entities. We pretend these problems are unique and intractable because solving them would mean a level of wealth redistribution, but honestly that’s well overdue.
- sumtechguy 5y agoIt is also an asset you can borrow against. Once you get past a particular point with money, debt becomes a tool, not something you do to get something. Paying back debt is considered a business expense. Once you see that and you understand that you can work the tax system to pay less in taxes. Rent is just a bonus. Sometimes they will set the rent high just so they do not have to mess with it. One of the few things that 2016 tax plan did was to put a cap on how much you could write off in many conditions.