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Owning a home takes a huge amount off of your taxes in the United States. This mainly applies to single people or people who don't file with dependents as they'

by kodah 4y ago

Owning a home takes a huge amount off of your taxes in the United States. This mainly applies to single people or people who don't file with dependents as they're taxed the most. A home acts as a way to store and grow cash (mostly) securely. They also, generally, have higher than (stock) market rates of returns for the cash that you stuff in them. For instance, do a $50k kitchen renovation and that may entice a future buyer to buy at $100k more. There's a lot of examples like this throughout the housing renovation industry. Some home renovations are going to net you nothing, but defer something negative. For instance, I had to install a Radon system in my home because radioactive gas was leaking out of the crust deep beneath my basement. I won't get that $3k back but I won't live in a radioactive container and future buyers won't be scared off (rightfully so). If you're renting (since you mentioned landlords) the economics change a bit. You need the house to look nice but you either need it super-durable or inexpensive to repair. What usually happens is that a rented home gets a makeover that will put it squarely in the price the landlord wants per month. This is done as cheap as possible because a fair amount of tenants are radioactive and will destroy everything not nailed down. If you're selling your home after five years you may have some nominal value increase coupled with equity. For me, that amounted to about $35k on a $215k home. To replicate that in the markets you'd have to get involved in a life insurance plan that acts as a tax-free market account, which is significantly more complicated to manage. I know because I almost did it when I moved to California! If you plan to stay in a house less than 5-8 years, I just wouldn't buy. You'll be somewhat upside down depending on your market.

oarsinsync 4y ago
> This is done as cheap as possible because a fair amount of tenants are radioactive and will destroy everything not nailed down. The other way of phrasing this is that landlords are as cheap as possible, resulting in tenants who are fed up of being fleeced for garbage.
- kodah 4y ago
  No, those things are separate problems, not two ways of saying the same thing. Tenants being destructive is a known issue. My mother had a tenant that put four undocumented pitbulls in the house and one dug it's way through the flooring. She had another that refused to pay rent or move out and had to wait for months to get an eviction order. All of that is purely money lost if you're renting to people with no assets. What I was talking about with landlords being cheap on renovations has to do with the economics of the situation. For instance, my mother won't put granite countertops in a house or use the most expensive paint or even moderately expensive carpet. In her state, every property that's had an animal in it requires new paint and new carpets every time there's a new tenant. If she was putting the nicest stuff in the tenants she rents to now would never be able to afford her rates. Where landlords get unjustifiably cheap is when they make repairs on the cheap that cause more issues for the tenant.
ehnto 4y ago
In Australia it's backwards and bonkers, the tax legislation is geared toward giving real-estate investment properties a bunch of tax breaks while someone living in their home gets diddly squat. I'm not necessarily saying we shouldn't pay tax on properties we live in, but I will say it's pretty on the nose to continue giving investment properties huge tax breaks while people are struggling to finance homes they live in or pay rent. The price inflation of homes caused by easy money and negative-gearing made easier due to lopsided tax policy makes the property market entirely detached from the average Australian.
- Panzer04 4y ago
  This isn't really accurate. Homeowners get the enormous PPOR CGT exemption, which means they pay no capital gains on their primary home when they sell - This can be a massive amount of money in an up market (the past two decades, especially)
  - ehnto 4y ago
    I appreciate the correction, but I feel that doesn't help people trying to live in their homes. We're not all climbing the property ladder after all.

by kodah 4y ago

oarsinsync 4y ago

> This is done as cheap as possible because a fair amount of tenants are radioactive and will destroy everything not nailed down. The other way of phrasing this is that landlords are as cheap as possible, resulting in tenants who are fed up of being fleeced for garbage.

kodah 4y ago
No, those things are separate problems, not two ways of saying the same thing. Tenants being destructive is a known issue. My mother had a tenant that put four undocumented pitbulls in the house and one dug it's way through the flooring. She had another that refused to pay rent or move out and had to wait for months to get an eviction order. All of that is purely money lost if you're renting to people with no assets. What I was talking about with landlords being cheap on renovations has to do with the economics of the situation. For instance, my mother won't put granite countertops in a house or use the most expensive paint or even moderately expensive carpet. In her state, every property that's had an animal in it requires new paint and new carpets every time there's a new tenant. If she was putting the nicest stuff in the tenants she rents to now would never be able to afford her rates. Where landlords get unjustifiably cheap is when they make repairs on the cheap that cause more issues for the tenant.

ehnto 4y ago

In Australia it's backwards and bonkers, the tax legislation is geared toward giving real-estate investment properties a bunch of tax breaks while someone living in their home gets diddly squat. I'm not necessarily saying we shouldn't pay tax on properties we live in, but I will say it's pretty on the nose to continue giving investment properties huge tax breaks while people are struggling to finance homes they live in or pay rent. The price inflation of homes caused by easy money and negative-gearing made easier due to lopsided tax policy makes the property market entirely detached from the average Australian.

Panzer04 4y ago
This isn't really accurate. Homeowners get the enormous PPOR CGT exemption, which means they pay no capital gains on their primary home when they sell - This can be a massive amount of money in an up market (the past two decades, especially)
- ehnto 4y ago
  I appreciate the correction, but I feel that doesn't help people trying to live in their homes. We're not all climbing the property ladder after all.