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Targeted taxes. Higher income taxes on rent deriving from residential property, higher capital gains taxes on residential property and higher inheritance taxes

Targeted taxes. Higher income taxes on rent deriving from residential property, higher capital gains taxes on residential property and higher inheritance taxes on secondary homes. This would of course require political will. What it would do is make residential property a much less attractive financial investment. The other recent phenomenon/issue is loose monetary policy. When interest rates are too low, asset values increase. We have just had a period of very low rates for an extended period of time. As interest rates rise, prices should level out or drop off.

gedy 4y ago
> What it would do is make residential property a much less attractive financial investment. While I agree with this, bear in mind that for some people, housing is the only "investment"/inflation hedge available to them. Without public pensions, lower to middle class people need something to fund retirement and we should be careful that " make residential property a much less attractive financial investment" doesn't just hurt those people vs the REIC, Berkshire Hathaways, etc.
mym1990 4y ago
Wouldn't the higher taxes just be passed off to the renter?
- slt2021 4y ago
  rent is always priced to maximum of purchasing power. If there was any more leeway to raise rent and keep renters, it would have been raised already by landlord
  - mym1990 4y ago
    This seems to be a textbook answer, but in reality we live in a world where people(renters and homeowners) have imperfect information. There is no renter out there that knows exactly how much they can get to the dollar. They have to compare with market prices and make a reasonable guess.
- jon_adler 4y ago
  Potentially in the short term, if government were to introduce such tax policies as changes to the status quo. These types of short term changes/issues can perhaps be remedied via short term tax credits or similar for those renters impacted. In the longer term and at the macro level, renting ultimately competes with cost of mortgaging. If the cost of home ownership goes down, so should rents. Again, government backed loans could help those renters who can afford the monthly repayments but lack the upfront deposit/capital to purchase. What is needed is lower residential house purchases prices which will flow into rental costs (eventually). In the long run, rents are always based on the underlying asset value. The other thing that could help lower residential property prices is obviously on the supply side, which I have deliberately avoided.
- yobbo 4y ago
  When there is deficit of supply, prices stabilize at the margin where increasing price also decreases the quantity sold. Monopoly prices = increasing prices reduces revenue. Also look up "rent seeking".

gedy 4y ago

> What it would do is make residential property a much less attractive financial investment. While I agree with this, bear in mind that for some people, housing is the only "investment"/inflation hedge available to them. Without public pensions, lower to middle class people need something to fund retirement and we should be careful that " make residential property a much less attractive financial investment" doesn't just hurt those people vs the REIC, Berkshire Hathaways, etc.

mym1990 4y ago

Wouldn't the higher taxes just be passed off to the renter?

slt2021 4y ago
rent is always priced to maximum of purchasing power. If there was any more leeway to raise rent and keep renters, it would have been raised already by landlord
- mym1990 4y ago
  This seems to be a textbook answer, but in reality we live in a world where people(renters and homeowners) have imperfect information. There is no renter out there that knows exactly how much they can get to the dollar. They have to compare with market prices and make a reasonable guess.
jon_adler 4y ago
Potentially in the short term, if government were to introduce such tax policies as changes to the status quo. These types of short term changes/issues can perhaps be remedied via short term tax credits or similar for those renters impacted. In the longer term and at the macro level, renting ultimately competes with cost of mortgaging. If the cost of home ownership goes down, so should rents. Again, government backed loans could help those renters who can afford the monthly repayments but lack the upfront deposit/capital to purchase. What is needed is lower residential house purchases prices which will flow into rental costs (eventually). In the long run, rents are always based on the underlying asset value. The other thing that could help lower residential property prices is obviously on the supply side, which I have deliberately avoided.
yobbo 4y ago
When there is deficit of supply, prices stabilize at the margin where increasing price also decreases the quantity sold. Monopoly prices = increasing prices reduces revenue. Also look up "rent seeking".