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It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how man

by sfe22 4y ago

It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. Without this it would be much harder to get a bigger house once you have kids. Most people would have a harder time moving and removing this would lower our quality of life.

namdnay 4y ago
> If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. so if they can't afford to pay tax on the windfall, they'd have to sell the house and buy a smaller one. is that the end of the world? > Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill what they have in many european countries is that you can do this only on your primary residence. so you let people upgrade their homes, but not their rental properties
- namelessoracle 4y ago
  So a family on hard times should be forced to leave their grandmothers home when she dies and hope they can find a new one? Gentrification can easily push a property in the place they've lived their whole lives out of their price range. And the family home might not have been super well kept up so the "windfall" isn't as big as the property values in the area may reflect. This happens now with gentrification in big cities, it would get worse with what you are saying. Being able to leave something to your descendants is a critical part of society. If people know they cant leave anything behind they start acting differently (and not in a good way). I understand a key part of communism is you and your family own nothing, but trust me you don't want people to have a use it or lose it attitude towards everything.
  - charlescearl 4y ago
    > I understand a key part of communism is you and your family own nothing As I understand, a key part is coming to the realization you and your family have already been robbed (or evicted to go back to your example), and then to ask what's next? At least as I understand Marx, particularly in Capital v. III, the point is to construct a world in which poor & working class regain collective control of resources like food, shelter, health that sustain life. The abolition of transfer of private property is intended to end the cycle of extracted (stolen) life-sustaining resources ending up in the hands of the same family (or dominant group). As a case in point, the theft of Black farm land has been well documented https://www.reuters.com/world/us/us-black-farmers-lost-326-bln-worth-land-20th-century-study-2022-05-02/ https://www.reuters.com/world/us/us-black-farmers-lost-326-b.... The point of communist organizing in Alabama during the 1930's -- detailed in Robin DG Kelley's "Hammer and Hoe" -- was to protect Black small farm owners from theft of their meager lands, and to take actions so that sharecroppers (tenant farm workers) could collectively control enough land to sustain themselves.
  - colinmhayes 4y ago
    Yes, if you can't afford your house you need to find a new one. The family will come out well ahead here because the tax would only be on a percentage of the houses value, they can use the proceeds to buy a new, cheaper house. No one has the right to live anywhere just because their grandma did.
    - deleted 4y ago
      [deleted]
  - namdnay 4y ago
    In what universe does paying tax on what you inherit equate to communism?
    - ROTMetro 4y ago
      When you effectively take someone's home for government benefit. People think that when they buy property they own it. You're model is more the China version. You don't own property, you only lease it from the government. Hence, your model looks more like the communist model than the traditional Western one.
- seiferteric 4y ago
  If you had to pay the tax you could probably just finance it anyway instead of paying it all at once so it would be just like having a new (small) mortgage.
  - l33t2328 4y ago
    That’s what every parent hopes to leave their kids with: an obligation
    - NoSorryCannot 4y ago
      Oooor they can sell it, as originally stated. Goodness. The point is reduce land entitlement a little bit. Yes, there's going to be some light incentive to cut loose and that's OK.
      - foobarian 4y ago
        Now the US is way ahead of the game here compared to Europe. There are no property taxes in most of Europe and families hang on to their homes for generations.
        japanuspus 4y ago
        This appears to differ across Europe. I know for a fact (through living here) that Denmark and probably the rest of Scandinavia has property tax and inheritance tax -- holding on to family property is almost as expensive as buying new property. Which part of Europe are you referring to? I once had Greek colleague who complained about having to maintain three generations worth of houses, so that might be one place where things are as you describe?
        foobarian 4y ago
        Right, Europe is bound to be diverse on this point. I have exposure to Balkan countries and the UK (which, while they do have non-zero rates, still have them far lower what I'm used to in New England).
SamoyedFurFluff 4y ago
I think inheriting property should absolutely force children out of their home unless they plan to actually live in it as their primary home immediately, and even if they do, they should be paying the same taxes as the rest of the neighborhood.
- toomuchtodo 4y ago
  60 days to occupy would be reasonable, same guidelines for when a primary residence mortgage is originated.
lotsofpulp 4y ago
> Without this it would be much harder to get a bigger house once you have kids. Most people would have a harder time moving and removing this would lower our quality of life. If the goal is to help people consume more of <x>, then give them cash. Giving assistance via tax rules is a way to discriminate who gets to benefit from government subsidized while maintaining plausible deniability. It also helps obfuscate the costs.
pessimizer 4y ago
> It is easy to pick an example like this to show the “bad” sides. You're saying this as if the example is a cherrypicked outlier rather than ubiquitous. > If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. At some point in the value of a home, we're not really worried about that. We do not sympathize when someone can't keep their parent's $50 million dollar home tax-free. We've set that cap at around $12 million. It's a very high cap. edit: we're happy to grab the estates of working people who end their lives in intensive care, nursing homes and hospices, before the Medicare kicks in.
skybrian 4y ago
If you can defer taxes long enough, deferring taxes is avoiding them.
Ekaros 4y ago
How high would that tax bill be? 50-60%? Still would be lot under fair value of property and thus should be able to get loan against that tax amount. So I really see no reason not to have it taxed.
ska 4y ago
Don't lots of places differentiate between a primary residence and any other real estate, basically for this reason?
- dexterdog 4y ago
  Not when it comes to property taxes they don't.
idkyall 4y ago
> Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. I think it's fine to allow this treatment for a home used as a primary residence for the exact reasons you mention, but I don't understand the logic of allowing it for an investment property
malfist 4y ago
>If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man If your family is leaving you a house worth more than $12 million, you can afford to pay the tax man.
nly 4y ago
Selling the family home when you inherit in the UK is the norm.
jefftk 4y ago
> what is the alternative? Inherit the cost basis.
- skybrian 4y ago
  There's an argument that for inherited property, the cost basis should be zero since you didn't pay anything for it; you got it for free. Although, that's effectively a tax on inheritance that's due at sale, which would probably be a fairly big incentive against ever selling, and instead structuring it as a long-term lease.
distances 4y ago
> But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. This is absolutely normal in the rest of the world, and there's nothing wrong with it. People don't go bankrupt over inherited property. The tax-free inheritance part is also ridiculous, in my humble opinion inheritance should be fully taxed.
avereveard 4y ago
> But what is the alternative? a tax per square feet on residential properties where the owner doesn't live in for more than half a year, irregardless of wheter it's rented out or not, and independent from the tax from rent income. since "promoting good behaviour" trough taxation didn't work the last idk 50 years, it's time to be back to "punish bad behaviour"

by sfe22 4y ago

namdnay 4y ago

> If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. so if they can't afford to pay tax on the windfall, they'd have to sell the house and buy a smaller one. is that the end of the world? > Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill what they have in many european countries is that you can do this only on your primary residence. so you let people upgrade their homes, but not their rental properties

namelessoracle 4y ago
So a family on hard times should be forced to leave their grandmothers home when she dies and hope they can find a new one? Gentrification can easily push a property in the place they've lived their whole lives out of their price range. And the family home might not have been super well kept up so the "windfall" isn't as big as the property values in the area may reflect. This happens now with gentrification in big cities, it would get worse with what you are saying. Being able to leave something to your descendants is a critical part of society. If people know they cant leave anything behind they start acting differently (and not in a good way). I understand a key part of communism is you and your family own nothing, but trust me you don't want people to have a use it or lose it attitude towards everything.
- charlescearl 4y ago
  > I understand a key part of communism is you and your family own nothing As I understand, a key part is coming to the realization you and your family have already been robbed (or evicted to go back to your example), and then to ask what's next? At least as I understand Marx, particularly in Capital v. III, the point is to construct a world in which poor & working class regain collective control of resources like food, shelter, health that sustain life. The abolition of transfer of private property is intended to end the cycle of extracted (stolen) life-sustaining resources ending up in the hands of the same family (or dominant group). As a case in point, the theft of Black farm land has been well documented https://www.reuters.com/world/us/us-black-farmers-lost-326-bln-worth-land-20th-century-study-2022-05-02/ https://www.reuters.com/world/us/us-black-farmers-lost-326-b.... The point of communist organizing in Alabama during the 1930's -- detailed in Robin DG Kelley's "Hammer and Hoe" -- was to protect Black small farm owners from theft of their meager lands, and to take actions so that sharecroppers (tenant farm workers) could collectively control enough land to sustain themselves.
- colinmhayes 4y ago
  Yes, if you can't afford your house you need to find a new one. The family will come out well ahead here because the tax would only be on a percentage of the houses value, they can use the proceeds to buy a new, cheaper house. No one has the right to live anywhere just because their grandma did.
  - deleted 4y ago
    [deleted]
- namdnay 4y ago
  In what universe does paying tax on what you inherit equate to communism?
  - ROTMetro 4y ago
    When you effectively take someone's home for government benefit. People think that when they buy property they own it. You're model is more the China version. You don't own property, you only lease it from the government. Hence, your model looks more like the communist model than the traditional Western one.
seiferteric 4y ago
If you had to pay the tax you could probably just finance it anyway instead of paying it all at once so it would be just like having a new (small) mortgage.
- l33t2328 4y ago
  That’s what every parent hopes to leave their kids with: an obligation
  - NoSorryCannot 4y ago
    Oooor they can sell it, as originally stated. Goodness. The point is reduce land entitlement a little bit. Yes, there's going to be some light incentive to cut loose and that's OK.
    - foobarian 4y ago
      Now the US is way ahead of the game here compared to Europe. There are no property taxes in most of Europe and families hang on to their homes for generations.
      - japanuspus 4y ago
        This appears to differ across Europe. I know for a fact (through living here) that Denmark and probably the rest of Scandinavia has property tax and inheritance tax -- holding on to family property is almost as expensive as buying new property. Which part of Europe are you referring to? I once had Greek colleague who complained about having to maintain three generations worth of houses, so that might be one place where things are as you describe?
        foobarian 4y ago
        Right, Europe is bound to be diverse on this point. I have exposure to Balkan countries and the UK (which, while they do have non-zero rates, still have them far lower what I'm used to in New England).

SamoyedFurFluff 4y ago

I think inheriting property should absolutely force children out of their home unless they plan to actually live in it as their primary home immediately, and even if they do, they should be paying the same taxes as the rest of the neighborhood.

toomuchtodo 4y ago
60 days to occupy would be reasonable, same guidelines for when a primary residence mortgage is originated.

lotsofpulp 4y ago

> Without this it would be much harder to get a bigger house once you have kids. Most people would have a harder time moving and removing this would lower our quality of life. If the goal is to help people consume more of <x>, then give them cash. Giving assistance via tax rules is a way to discriminate who gets to benefit from government subsidized while maintaining plausible deniability. It also helps obfuscate the costs.

pessimizer 4y ago

> It is easy to pick an example like this to show the “bad” sides. You're saying this as if the example is a cherrypicked outlier rather than ubiquitous. > If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. At some point in the value of a home, we're not really worried about that. We do not sympathize when someone can't keep their parent's $50 million dollar home tax-free. We've set that cap at around $12 million. It's a very high cap. edit: we're happy to grab the estates of working people who end their lives in intensive care, nursing homes and hospices, before the Medicare kicks in.

skybrian 4y ago

If you can defer taxes long enough, deferring taxes is avoiding them.

Ekaros 4y ago

How high would that tax bill be? 50-60%? Still would be lot under fair value of property and thus should be able to get loan against that tax amount. So I really see no reason not to have it taxed.

ska 4y ago

Don't lots of places differentiate between a primary residence and any other real estate, basically for this reason?

dexterdog 4y ago
Not when it comes to property taxes they don't.

idkyall 4y ago

> Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. I think it's fine to allow this treatment for a home used as a primary residence for the exact reasons you mention, but I don't understand the logic of allowing it for an investment property

malfist 4y ago

>If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man If your family is leaving you a house worth more than $12 million, you can afford to pay the tax man.

nly 4y ago

Selling the family home when you inherit in the UK is the norm.

jefftk 4y ago

> what is the alternative? Inherit the cost basis.

skybrian 4y ago
There's an argument that for inherited property, the cost basis should be zero since you didn't pay anything for it; you got it for free. Although, that's effectively a tax on inheritance that's due at sale, which would probably be a fairly big incentive against ever selling, and instead structuring it as a long-term lease.

distances 4y ago

> But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. This is absolutely normal in the rest of the world, and there's nothing wrong with it. People don't go bankrupt over inherited property. The tax-free inheritance part is also ridiculous, in my humble opinion inheritance should be fully taxed.

avereveard 4y ago

> But what is the alternative? a tax per square feet on residential properties where the owner doesn't live in for more than half a year, irregardless of wheter it's rented out or not, and independent from the tax from rent income. since "promoting good behaviour" trough taxation didn't work the last idk 50 years, it's time to be back to "punish bad behaviour"