5 ms·

I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pus

by fleddr 4y ago

I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Next: "This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York." How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? If so, why not just get rid of speculative buying (simply make it illegal)? What does it have to do with property tax for ordinary citizens? And what on earth does Chicago have to do with San Francisco or New York?

negamax 4y ago
What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check
- cryptonector 4y ago
  That can be right in the short term, but in the long term you'd expect developers to stay out of the market, so how is it that Chicago has a "glut of high quality housing at very low prices"?
  - paconbork 4y ago
    My guess is that this probably indicates that the primary obstacle to construction currently isn't developer capital. It could be that housing construction is still profitable, as there's comparatively less political resistance and less of the budget has to go to legal fees and bribes. In the interest of being intellectually honest though, that's probably not the full story. It's worth pointing out that Chicago's population peaked in the 50's and that property taxes were probably lower back then. Also worth pointing out that there's a lot of directions for sprawl to help meet housing demand. I actually grew up in Indiana and my dad worked in Chicago. We lived in Indiana because the property tax was significantly lower even though housing prices were comparable.
  - xphos 4y ago
    I don't think this statement is true because in high cost areas developers still don't develop because higher price also mean higher land costs. On top of that places like NY have lower taxes but not enough development over a long term scale. This taxes codes don't change on a whim. There is also a factor of zoning when it comes to build there very well might not be any land to develop near a city because it's all saturated from long term speculation
    - cryptonector 4y ago
      In NYC property taxes are almost certainly the least relevant issue. In NYC there is a tremendous amount of political friction around new high-rise construction.
- skybrian 4y ago
  On the other hand, it also increases the demand to rent property on AirBnB, if that's allowed and it's a desirable area. Tourists can pay more than locals. In general, as costs go up, the more there is incentive to try to cater to wealthier customers.
- KerrAvon 4y ago
  The elephant in the room is the amount of housing supply being held by banks and private equity in an effort to shore up housing prices. They can afford high property taxes. Your elderly parents might not be able to. Obama should have let the bankers twist in the wind when the citizenry was out for blood in 2008. They repaid him by channeling money to Republicans. Put them all in jail.
  - jfim 4y ago
    > They can afford high property taxes. Your elderly parents might not be able to. Texas has an interesting solution to this. Homeowners over 65 can elect to defer the payment of their property taxes indefinitely, although the taxes eventually get paid when the house changes owners.
    - CorpOverreach 4y ago
      So it's basically taking an interest-free home equity loan against the property, in a round-about way? You're basically de-valuing the property since whoever buys it next will have to pay a lump sum in taxes to take ownership. I guess that doesn't matter to you if you're dead. What happens if the deferred taxes exceed the cost of the house?
      - jfim 4y ago
        The estate has to pay the taxes, so they can pay the taxes and keep the property, or sell it and pay the taxes using the proceeds. I believe that interest also accrues during the deferral. I'm not sure what happens in the case where the accrued taxes exceed the value of the house, though.
        jfim 4y ago
        Just looked it up actually: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.33.htm#33.06 https://statutes.capitol.texas.gov/Docs/TX/htm/TX.33.htm#33.... Basically they put a tax lien on the property, they just don't collect on it while the original homeowner is occupying the property. I'm not a lawyer, but my basic understanding of this is that if it exceeds the value of the property, the estate can just let the city/county seize the house. Otherwise, they'd need to pay the deferred taxes in order to transfer the title to the heirs. Obviously this is not legal advice.
cryptonector 4y ago
I doubt speculator demand has anything to do with anything in the long term. I also doubt that developers would bother with a market like the one described. Why not go to some other state/city where construction costs are low and property taxes are also low?
- washadjeffmad 4y ago
  Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market. As the "cheapest of the Big 6", once Atlanta falls, other cities will, as well. General contractors don't just do general contracting, and it's not like tech where you can pick up and move anywhere there's internet.
  - gruez 4y ago
    >Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market source? On one hand they could be as you said, but the alternative could be that investors think that "cheapest of the big 6" makes real estate there undervalued and therefore a good investment.
8ytecoder 4y ago
Even if this is provable, why not have a progressive property tax rate? Owner occupied properties can be charged half the rate of rented properties. Rather than increase it for everyone and making it harder on the very people who are likely to sell it to a speculative investor.
- danielheath 4y ago
  Now you need to police whether people are living in specific houses. This is simple and much harder to get wrong.
  - 8ytecoder 4y ago
    I understand it's going to hard but not impossible. Assessors can work together at the state level and identify owners with multiple properties and send them the extra tax bill or a way to dispute it. They have enough information about what we own and where we live.
    - danielheath 4y ago
      Tax policies that require more than perfunctory policing are generally a bad idea IMO; tax evasion becomes a realistic option (everything from farming out properties to their extended family to "reside in" to avoid paying the higher rate to befriending assessors to have them misidentify you as a resident). Policing is definitely possible, but I don't think the added cost and operational complexity make it advisable.
- amerkhalid 4y ago
  Landlords will just pass the extra tax to tenets. And mostly low income tenets will bear the cost as they are least likely to have enough money for down payment.
  - danielheath 4y ago
    "We can't tax landlords, they'll make the tenants pay for it" is not how markets work. Pricing is held down by ability to pay, because - as far as landlords are concerned - getting paid some money is better than getting none. Longer term, the impact on rental costs depends on whether you think this policy would increase the amount of housing available for people to live in. Where I live, many properties are bought and kept empty - the rental income isn't worth the hassle and they are being held for capital gains. High property taxes would presumably result in some of those properties being sold to occupiers. Consider an extreme case - a land value tax of 20% (meaning you pay the government the full value of the unimproved land every 5 years). Land values would plummet, right? Lets say it were introduced over 30 years, so prices could adjust smoothly instead of crashing. What does the steady state look like after 30 years?
ed25519FUUU 4y ago
> And what on earth does Chicago have to do with San Francisco or New York? This was such a laughable comparison because BOTH of these cities have high property taxes compared with more affordable cities in other states.
- smugma 4y ago
  San Francisco (all of CA) has very low property taxes compared to non-CA cities. Because of Prop 13, property taxes are limited to 1% of the purchase price of the home (appraised values can change a max of 2%/yr). As a result, my neighbor has a house with an effective tax rate of <0.1% ($3,000/yr on a single family house worth >$3M).
- bradgessler 4y ago
  I don’t know about NY, but in SF property taxes are effectively frozen based on the value of your home when purchased. I rented a house once in West Portal where the landlord was paying property taxes on the 1970 value of the home, which was something like $70k. The owner was gifted this house and taxes basis from their parents, who originally bought it. The tax bill came out to just a few thousand dollars as of 2020. Meanwhile my neighbor at the time bought their house for $3m and was paying something like $35k. I thought about writing the property taxes in front of each house on the sidewalk with sidewalk chalk to make a point how messed up this tax policy is, but I opted instead to keep the peace and do nothing. This loophole is used by families in CA as a way to pass assets to their heirs. The worst part is the tax rate also gets passed down, but one generation tops.
  - smugma 4y ago
    This website makes it easy. I looked up West Portal and there are several homes paying 1-3K, many in the 15-20K, and some 30K+ https://www.officialdata.org/ca-property-tax/#37.74219147779023,-122.46279448270799,19 https://www.officialdata.org/ca-property-tax/#37.74219147779...
    - bradgessler 4y ago
danielheath 4y ago
How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence? Nobody is willing to pay as much up front for housing that has higher ongoing costs.
- fleddr 4y ago
  Because a suppression of price would also suppress new development? Why would a builder build anything in an area of low profitability, in a backdrop of rising costs and worker shortages? So how come there's ample low cost high quality housing in Chicago? The same remark applies to home owners. Your property won't rise in value, so why buy it? You must really want to live in the area, I guess. And yes, I know the point of a house is to live in it, but almost everywhere it has a double function in also being an appreciating retirement fund. For now my theory is that a lot of speculative supply got dumped, leading to a one time effect.
  - klipt 4y ago
    I think there are higher order effects at play. For example low property taxes encourages NIMBYism which results in lower density zoning which reduces new supply. If high property taxes reduce NIMBYism by making homeowners feel the housing crisis themselves, that alone could ultimately increase affordability.
  - danielheath 4y ago
    > almost everywhere it has a double function in also being an appreciating retirement fund. That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth. Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look like at 10% per annum? 20%? 100%? At 100% per annum, the average land value of a house needs to be below $50k or so in current dollars (most would need to be much less). Any higher, and ~nobody is willing to pay the taxes. A large home costs $200k or so to build vs a small/cheap home at 80k, so property prices now range from 50k (old cheap home) to 250k (new, high-end home). That's a huge result for housing affordability! People are currently saving deposits of 80k to get a mortgage. Instead of paying mortgage costs to capital holders, you're paying tax to a government that ostensibly exists to serve you. Instead of buying "the most I can afford so I get a retirement fund", now people are buying housing based on their willingness to pay an ongoing cost for access to amenities.
JustSomeNobody 4y ago
If I have $10M to spend on property to take out of the market and hold for a period, do I buy where it will cost me 250k per year in taxes or 50k per year in taxes?
- jjav 4y ago
  If you're a speculator, you'll buy it wherever the expected profit, after taking out all expenses, is the highest. If the tax is high in a location where they think they can flip the house for a 50% gain in a few years that's still better profit than a lower tax in a place where they'll gain 5% in a few years. So the property tax doesn't, all by itself, matter to the speculator. It's just a cost of doing business. A high property tax does, however, hurt the person who just wants a house to live in it and doesn't care about being a speculator.
tmnvix 4y ago
>> now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Homeowners are concerned with the size of the deposit required, the size of the loan needed, and ongoing costs (inc taxes). This tax will likely mean a smaller deposit and loan than would otherwise be the case. This could be offset by higher ongoing costs by the property tax. For a speculator, they have the same concerns as a homeowner, but most significantly the potential for capital gains. Yield also comes into it, but let's face it - without strong capital gains no one would be paying these prices (homeowners included). Lower potential for capital gains effects speculator demand more than homeowner demand.
marcosdumay 4y ago
> How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? Speculators are forced to sell, because the cost of keeping too many houses locked down is high and starts to show on their books, so they have to explain it to the investors, that go away unsatisfied, and so on. Of course, that only makes a difference if there are many unused houses. Also the idea is that as prices fall, the absolute value of the tax falls, but speculators still do not have a motivation to buy them, because the price isn't expected to rise. > If so, why not just get rid of speculative buying (simply make it illegal)? Because you will need an entire book of rules, that lawyers will use to get a lot of money, and rich people will use to make the tax not apply to them. (But there are some simple rules that can only be gamed a bit. Maybe those are enough.)
onlyrealcuzzo 4y ago
> If so, why not just get rid of speculative buying (simply make it illegal)? How do you propose to do that in the US?
- monetus 4y ago
  Laws requiring occupancy before selling them? Just guessing.
cozzyd 4y ago
I agree that the cause and effect is backwards, but for a different reason. High property values lead to lower property tax rates (but not necessarily dollar amounts). The total property tax is largely set by how much money is needed to provide services to a place, which is mostly independent of property values (though I guess stuff like building schools is more expensive if it costs more to buy the land). NYC also has a city income tax further lowering the amount of money that needs to be raised.
junofan 4y ago
> These genuine owners are paying high property taxes. Not if the tax base goes down. Which is the point. > If so, why not just get rid of speculative buying (simply make it illegal)? This makes the lawyer rich too. It’s not a smash-and-grab at a Walgreens. You can’t put real estate cops on every deal. If price is expected to go up, people will speculate.
raxxorraxor 4y ago
I think it is utopia to compete with investors on price. Sure, you can make it too expensive for them. It will be too expensive for everyone else too. Why not make property tax cumulative with the amount of property owned and impose a progressive tax here? It would have an equalizing effect on ownership and speculation would be less attractive for those that already own o lot of properties. Sure, you have to fix a lot of holes to circumvent taxes so that not every company creates a large amount of holdings, but such strategies are a problem with every tax. To now say a high property tax would scare away investors doesn't sound workable at all.

by fleddr 4y ago

negamax 4y ago

What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check

cryptonector 4y ago
That can be right in the short term, but in the long term you'd expect developers to stay out of the market, so how is it that Chicago has a "glut of high quality housing at very low prices"?
- paconbork 4y ago
  My guess is that this probably indicates that the primary obstacle to construction currently isn't developer capital. It could be that housing construction is still profitable, as there's comparatively less political resistance and less of the budget has to go to legal fees and bribes. In the interest of being intellectually honest though, that's probably not the full story. It's worth pointing out that Chicago's population peaked in the 50's and that property taxes were probably lower back then. Also worth pointing out that there's a lot of directions for sprawl to help meet housing demand. I actually grew up in Indiana and my dad worked in Chicago. We lived in Indiana because the property tax was significantly lower even though housing prices were comparable.
- xphos 4y ago
  I don't think this statement is true because in high cost areas developers still don't develop because higher price also mean higher land costs. On top of that places like NY have lower taxes but not enough development over a long term scale. This taxes codes don't change on a whim. There is also a factor of zoning when it comes to build there very well might not be any land to develop near a city because it's all saturated from long term speculation
  - cryptonector 4y ago
    In NYC property taxes are almost certainly the least relevant issue. In NYC there is a tremendous amount of political friction around new high-rise construction.
skybrian 4y ago
On the other hand, it also increases the demand to rent property on AirBnB, if that's allowed and it's a desirable area. Tourists can pay more than locals. In general, as costs go up, the more there is incentive to try to cater to wealthier customers.
KerrAvon 4y ago
The elephant in the room is the amount of housing supply being held by banks and private equity in an effort to shore up housing prices. They can afford high property taxes. Your elderly parents might not be able to. Obama should have let the bankers twist in the wind when the citizenry was out for blood in 2008. They repaid him by channeling money to Republicans. Put them all in jail.
- jfim 4y ago
  > They can afford high property taxes. Your elderly parents might not be able to. Texas has an interesting solution to this. Homeowners over 65 can elect to defer the payment of their property taxes indefinitely, although the taxes eventually get paid when the house changes owners.
  - CorpOverreach 4y ago
    So it's basically taking an interest-free home equity loan against the property, in a round-about way? You're basically de-valuing the property since whoever buys it next will have to pay a lump sum in taxes to take ownership. I guess that doesn't matter to you if you're dead. What happens if the deferred taxes exceed the cost of the house?
    - jfim 4y ago
      The estate has to pay the taxes, so they can pay the taxes and keep the property, or sell it and pay the taxes using the proceeds. I believe that interest also accrues during the deferral. I'm not sure what happens in the case where the accrued taxes exceed the value of the house, though.
      - jfim 4y ago
        Just looked it up actually: https://statutes.capitol.texas.gov/Docs/TX/htm/TX.33.htm#33.06 https://statutes.capitol.texas.gov/Docs/TX/htm/TX.33.htm#33.... Basically they put a tax lien on the property, they just don't collect on it while the original homeowner is occupying the property. I'm not a lawyer, but my basic understanding of this is that if it exceeds the value of the property, the estate can just let the city/county seize the house. Otherwise, they'd need to pay the deferred taxes in order to transfer the title to the heirs. Obviously this is not legal advice.

cryptonector 4y ago

I doubt speculator demand has anything to do with anything in the long term. I also doubt that developers would bother with a market like the one described. Why not go to some other state/city where construction costs are low and property taxes are also low?

washadjeffmad 4y ago
Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market. As the "cheapest of the Big 6", once Atlanta falls, other cities will, as well. General contractors don't just do general contracting, and it's not like tech where you can pick up and move anywhere there's internet.
- gruez 4y ago
  >Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market source? On one hand they could be as you said, but the alternative could be that investors think that "cheapest of the big 6" makes real estate there undervalued and therefore a good investment.

8ytecoder 4y ago

Even if this is provable, why not have a progressive property tax rate? Owner occupied properties can be charged half the rate of rented properties. Rather than increase it for everyone and making it harder on the very people who are likely to sell it to a speculative investor.

danielheath 4y ago
Now you need to police whether people are living in specific houses. This is simple and much harder to get wrong.
- 8ytecoder 4y ago
  I understand it's going to hard but not impossible. Assessors can work together at the state level and identify owners with multiple properties and send them the extra tax bill or a way to dispute it. They have enough information about what we own and where we live.
  - danielheath 4y ago
    Tax policies that require more than perfunctory policing are generally a bad idea IMO; tax evasion becomes a realistic option (everything from farming out properties to their extended family to "reside in" to avoid paying the higher rate to befriending assessors to have them misidentify you as a resident). Policing is definitely possible, but I don't think the added cost and operational complexity make it advisable.
amerkhalid 4y ago
Landlords will just pass the extra tax to tenets. And mostly low income tenets will bear the cost as they are least likely to have enough money for down payment.
- danielheath 4y ago
  "We can't tax landlords, they'll make the tenants pay for it" is not how markets work. Pricing is held down by ability to pay, because - as far as landlords are concerned - getting paid some money is better than getting none. Longer term, the impact on rental costs depends on whether you think this policy would increase the amount of housing available for people to live in. Where I live, many properties are bought and kept empty - the rental income isn't worth the hassle and they are being held for capital gains. High property taxes would presumably result in some of those properties being sold to occupiers. Consider an extreme case - a land value tax of 20% (meaning you pay the government the full value of the unimproved land every 5 years). Land values would plummet, right? Lets say it were introduced over 30 years, so prices could adjust smoothly instead of crashing. What does the steady state look like after 30 years?

ed25519FUUU 4y ago

> And what on earth does Chicago have to do with San Francisco or New York? This was such a laughable comparison because BOTH of these cities have high property taxes compared with more affordable cities in other states.

smugma 4y ago
San Francisco (all of CA) has very low property taxes compared to non-CA cities. Because of Prop 13, property taxes are limited to 1% of the purchase price of the home (appraised values can change a max of 2%/yr). As a result, my neighbor has a house with an effective tax rate of <0.1% ($3,000/yr on a single family house worth >$3M).
bradgessler 4y ago
I don’t know about NY, but in SF property taxes are effectively frozen based on the value of your home when purchased. I rented a house once in West Portal where the landlord was paying property taxes on the 1970 value of the home, which was something like $70k. The owner was gifted this house and taxes basis from their parents, who originally bought it. The tax bill came out to just a few thousand dollars as of 2020. Meanwhile my neighbor at the time bought their house for $3m and was paying something like $35k. I thought about writing the property taxes in front of each house on the sidewalk with sidewalk chalk to make a point how messed up this tax policy is, but I opted instead to keep the peace and do nothing. This loophole is used by families in CA as a way to pass assets to their heirs. The worst part is the tax rate also gets passed down, but one generation tops.
- smugma 4y ago
  This website makes it easy. I looked up West Portal and there are several homes paying 1-3K, many in the 15-20K, and some 30K+ https://www.officialdata.org/ca-property-tax/#37.74219147779023,-122.46279448270799,19 https://www.officialdata.org/ca-property-tax/#37.74219147779...
  - bradgessler 4y ago

danielheath 4y ago

How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence? Nobody is willing to pay as much up front for housing that has higher ongoing costs.

fleddr 4y ago
Because a suppression of price would also suppress new development? Why would a builder build anything in an area of low profitability, in a backdrop of rising costs and worker shortages? So how come there's ample low cost high quality housing in Chicago? The same remark applies to home owners. Your property won't rise in value, so why buy it? You must really want to live in the area, I guess. And yes, I know the point of a house is to live in it, but almost everywhere it has a double function in also being an appreciating retirement fund. For now my theory is that a lot of speculative supply got dumped, leading to a one time effect.
- klipt 4y ago
  I think there are higher order effects at play. For example low property taxes encourages NIMBYism which results in lower density zoning which reduces new supply. If high property taxes reduce NIMBYism by making homeowners feel the housing crisis themselves, that alone could ultimately increase affordability.
- danielheath 4y ago
  > almost everywhere it has a double function in also being an appreciating retirement fund. That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth. Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look like at 10% per annum? 20%? 100%? At 100% per annum, the average land value of a house needs to be below $50k or so in current dollars (most would need to be much less). Any higher, and ~nobody is willing to pay the taxes. A large home costs $200k or so to build vs a small/cheap home at 80k, so property prices now range from 50k (old cheap home) to 250k (new, high-end home). That's a huge result for housing affordability! People are currently saving deposits of 80k to get a mortgage. Instead of paying mortgage costs to capital holders, you're paying tax to a government that ostensibly exists to serve you. Instead of buying "the most I can afford so I get a retirement fund", now people are buying housing based on their willingness to pay an ongoing cost for access to amenities.

JustSomeNobody 4y ago

If I have $10M to spend on property to take out of the market and hold for a period, do I buy where it will cost me 250k per year in taxes or 50k per year in taxes?

jjav 4y ago
If you're a speculator, you'll buy it wherever the expected profit, after taking out all expenses, is the highest. If the tax is high in a location where they think they can flip the house for a 50% gain in a few years that's still better profit than a lower tax in a place where they'll gain 5% in a few years. So the property tax doesn't, all by itself, matter to the speculator. It's just a cost of doing business. A high property tax does, however, hurt the person who just wants a house to live in it and doesn't care about being a speculator.

tmnvix 4y ago

>> now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Homeowners are concerned with the size of the deposit required, the size of the loan needed, and ongoing costs (inc taxes). This tax will likely mean a smaller deposit and loan than would otherwise be the case. This could be offset by higher ongoing costs by the property tax. For a speculator, they have the same concerns as a homeowner, but most significantly the potential for capital gains. Yield also comes into it, but let's face it - without strong capital gains no one would be paying these prices (homeowners included). Lower potential for capital gains effects speculator demand more than homeowner demand.

marcosdumay 4y ago

> How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? Speculators are forced to sell, because the cost of keeping too many houses locked down is high and starts to show on their books, so they have to explain it to the investors, that go away unsatisfied, and so on. Of course, that only makes a difference if there are many unused houses. Also the idea is that as prices fall, the absolute value of the tax falls, but speculators still do not have a motivation to buy them, because the price isn't expected to rise. > If so, why not just get rid of speculative buying (simply make it illegal)? Because you will need an entire book of rules, that lawyers will use to get a lot of money, and rich people will use to make the tax not apply to them. (But there are some simple rules that can only be gamed a bit. Maybe those are enough.)

onlyrealcuzzo 4y ago

> If so, why not just get rid of speculative buying (simply make it illegal)? How do you propose to do that in the US?

monetus 4y ago
Laws requiring occupancy before selling them? Just guessing.

cozzyd 4y ago

I agree that the cause and effect is backwards, but for a different reason. High property values lead to lower property tax rates (but not necessarily dollar amounts). The total property tax is largely set by how much money is needed to provide services to a place, which is mostly independent of property values (though I guess stuff like building schools is more expensive if it costs more to buy the land). NYC also has a city income tax further lowering the amount of money that needs to be raised.

junofan 4y ago

> These genuine owners are paying high property taxes. Not if the tax base goes down. Which is the point. > If so, why not just get rid of speculative buying (simply make it illegal)? This makes the lawyer rich too. It’s not a smash-and-grab at a Walgreens. You can’t put real estate cops on every deal. If price is expected to go up, people will speculate.

raxxorraxor 4y ago

I think it is utopia to compete with investors on price. Sure, you can make it too expensive for them. It will be too expensive for everyone else too. Why not make property tax cumulative with the amount of property owned and impose a progressive tax here? It would have an equalizing effect on ownership and speculation would be less attractive for those that already own o lot of properties. Sure, you have to fix a lot of holes to circumvent taxes so that not every company creates a large amount of holdings, but such strategies are a problem with every tax. To now say a high property tax would scare away investors doesn't sound workable at all.