6 ms·

> The rebuttal you're probably going to hear about this is how this will inordinately punish the private citizen buying a second home as an investment property.

> The rebuttal you're probably going to hear about this is how this will inordinately punish the private citizen buying a second home as an investment property. Why would it be desirable to encourage private citizens to use property as an investment? I mean, they'd perhaps need to be a one-time easing to ensure that people who have already planned their retirement around such a scheme aren't completely fucked over. But long term it seems to me that there's no downside to this being punished.

SketchySeaBeast 4y ago
Ultimately some people do need a place to rent to live. I saw someone else suggest that rentals are only allowed in apartments, maybe that solves this, but rentals are a vital part of the housing equation.
- nicoburns 4y ago
  Right, but people don't need to be making money out of that. I think you could set the tax rates so that people basically break even (make a small profit) from renting a house out, and they actually lose money if they hold on to a house they're not renting out (with some carefully worded time-limited exceptions for houses under renovation). That would drive down house prices sharpish! You could also allow the state to step in as owners of rental housing where private landlords aren't making enough rental houses available. And if the state actually built houses for rental you likely wouldn't need as harsh taxation because the rental prices would drop purely through the increased supply.
  - SketchySeaBeast 4y ago
    What stops the landlord from raising the rent? All the landlords will be under the same pressure, so rent should rise universally.
    - jfghi 4y ago
      They do that anyways.
  - crazygringo 4y ago
    Of course people need to be making money off it. Nobody would ever rent to tenants if there weren't profit in it. Take away the profit and all the tenants who need to rent are totally out of luck because nobody has any reason to rent to them. :( Same as mortgages wouldn't exist if banks didn't make a profit off them.
    - deleted 4y ago
      [deleted]
    - danaris 4y ago
      > Take away the profit and everybody who needs to rent is out of luck. How does that follow? Take the situation as it exists today—X amount of "housing units" exist, and Y of those "housing units" are owned by investors as rental properties. Now, change the situation so that it becomes unprofitable to own properties you are not occupying. All X of those housing units still exist. They won't be destroyed (well, maybe a few will, but not enough to seriously change the calculations), and if it's not profitable to rent them, it's going to be even less profitable to hang onto them sitting empty. What happens in that scenario? Well, they should be sold. Who would they be sold to? People who need a place to live (because no one's going to be buying them as investment or rental properties anymore). How much are they going to be sold for? The amount these people are willing and able to pay. Why would they be sold for significantly more than they would be rented out for before? Sure, some current owners would be in denial and unwilling to accept that they'd lose a bunch of money on it (or maybe, as nicoburns suggests, there would be some kind of one-time bailout/incentive/whatever to make sure that the current owners would sell, and wouldn't lose their shirts). But while it would certainly change the economics of the situation somewhat from what they are today, and it would take our society a few years to reorganize around it, ultimately, I don't believe removing the middleman landlord class from the equation would harm the people who are currently renting in the long term. Indeed, I think it would benefit them, because instead of being in a situation where they're basically guaranteed to have a significant portion of their earnings siphoned off purely to be allowed to have a place to exist, they would be building up equity in something through those payments...and once they finished paying the purchase price, they would own the place, no longer have to make payments, and be able to sell it on when they decided it was time to move.
- Ekaros 4y ago
  I never understood why apartments should be treated any different from houses. Any other good reason apart from selfish, I deserve to get own house?
acuozzo 4y ago
> But long term it seems to me that there's no downside to this being punished. It would punish people who need/want to move now, but don't want to sell their current home at a loss or can't sell their home due to market conditions, etc. Landlord(s)-by-necessity, if you will.
- nicoburns 4y ago
  You could potentially not apply the punitive taxation so long as only one house is owned, regardless of whether they are actually living in it (so renting one property while renting another one would be fine).
- ericmay 4y ago
  You can avoid elements of the proposal by the OP by selling and moving and then claiming the new primary residence like you do now. I don't think we should care if someone has to sell their current home at a loss due to market conditions because taken to its logical conclusion you're saying people shouldn't lose money which to have a functioning economy you have to reject.
  - tzs 4y ago
    > I don't think we should care if someone has to sell their current home at a loss due to market conditions But they are only selling at a loss because under the proposal they would be heavily taxed if they wanted to hold on to the house and rent it out while they wait for the market to get better. > taken to its logical conclusion you're saying people shouldn't lose money which to have a functioning economy you have to reject No, they are saying that you should let people decide when they want to sell instead of making them sell when they will take a loss. That doesn't mean they won't lose money when they sell. It just means they can decide based on market conditions when to sell--which is what you want if you want a well functioning economy.
    - GauntletWizard 4y ago
      A Well Functioning economy is the last thing that the people proposing punitive rental taxes want.
weard_beard 4y ago
Because the financial inefficiencies produced by individual owners currently take the place of trillions of dollars of subsidized housing that would be paid by the government to institutional investors to build and maintain housing affordable to teachers, retail workers, police, and firemen that institutional investors DON'T WANT TO OWN MAINTAIN OR BUILD. I am an individual property investor. I'm a landlord of a single 2-flat up-down duplex. I don't make as much money as I COULD make if I had endlessly deep pockets. It was sold to me by another individual real estate investor who owned and maintained it for 25 years. Do you know why he sold it? He wanted to buy a luxury property that he would make more profit on and require less maintenance. Without individual investors with limited pools of money investing in lower margin properties, simply hoping to augment a retirement account or 401k... Affordable housing would cease to exist.
- nicoburns 4y ago
  Why would governments subsidise institutional investors rather than simply buying and renting out the housing themselves? (which could be done at cost) I am sympathetic to the idea that individual landlords are better than large profit making businesses though.
  - weard_beard 4y ago
    Because governments don't want to be landlords. They don't want to have to orchestrate painting, drywall, gutters, electrical, plumbing, evictions, improvements, picking out tile, providing services that tenants grouped together with limited income might need like domestic abuse resolution and support, job training, food box distribution. Institutions don't want to be in this business either. My wife works for one of the largest ones in the midwest, and trust me, they value the land and developments much more than the rents. Government subsidy is AN incentive to maintain the above services at the MINIMUM viable and provable state to get their handout, but they are NOT landlords. Like McDonalds isn't a food company. They are real estate developers. And the experience of living in a 2-flat or a 4-flat is VERY different from a unit in a 500 person building. The ONLY way institutions would be willing to provide affordable housing would be a constant squeeze on tenants and government and every lever possible to try to make the margins meet that of a luxury apartment. It never will. And middle to low income families WILL SUFFER. A lot. Read this, but replace "burgers" with "rent": https://1851franchise.com/why-is-mcdonalds-considered-a-real-estate-company-2715077 https://1851franchise.com/why-is-mcdonalds-considered-a-real... When given the option of direct cash payments to folks who need it, or giving that cash to an ineffectual corrupt business interest to fail to solve the problem in perpetuity... In America we always choose the later. Especially government.

SketchySeaBeast 4y ago

Ultimately some people do need a place to rent to live. I saw someone else suggest that rentals are only allowed in apartments, maybe that solves this, but rentals are a vital part of the housing equation.

nicoburns 4y ago
Right, but people don't need to be making money out of that. I think you could set the tax rates so that people basically break even (make a small profit) from renting a house out, and they actually lose money if they hold on to a house they're not renting out (with some carefully worded time-limited exceptions for houses under renovation). That would drive down house prices sharpish! You could also allow the state to step in as owners of rental housing where private landlords aren't making enough rental houses available. And if the state actually built houses for rental you likely wouldn't need as harsh taxation because the rental prices would drop purely through the increased supply.
- SketchySeaBeast 4y ago
  What stops the landlord from raising the rent? All the landlords will be under the same pressure, so rent should rise universally.
  - jfghi 4y ago
    They do that anyways.
- crazygringo 4y ago
  Of course people need to be making money off it. Nobody would ever rent to tenants if there weren't profit in it. Take away the profit and all the tenants who need to rent are totally out of luck because nobody has any reason to rent to them. :( Same as mortgages wouldn't exist if banks didn't make a profit off them.
  - deleted 4y ago
    [deleted]
  - danaris 4y ago
    > Take away the profit and everybody who needs to rent is out of luck. How does that follow? Take the situation as it exists today—X amount of "housing units" exist, and Y of those "housing units" are owned by investors as rental properties. Now, change the situation so that it becomes unprofitable to own properties you are not occupying. All X of those housing units still exist. They won't be destroyed (well, maybe a few will, but not enough to seriously change the calculations), and if it's not profitable to rent them, it's going to be even less profitable to hang onto them sitting empty. What happens in that scenario? Well, they should be sold. Who would they be sold to? People who need a place to live (because no one's going to be buying them as investment or rental properties anymore). How much are they going to be sold for? The amount these people are willing and able to pay. Why would they be sold for significantly more than they would be rented out for before? Sure, some current owners would be in denial and unwilling to accept that they'd lose a bunch of money on it (or maybe, as nicoburns suggests, there would be some kind of one-time bailout/incentive/whatever to make sure that the current owners would sell, and wouldn't lose their shirts). But while it would certainly change the economics of the situation somewhat from what they are today, and it would take our society a few years to reorganize around it, ultimately, I don't believe removing the middleman landlord class from the equation would harm the people who are currently renting in the long term. Indeed, I think it would benefit them, because instead of being in a situation where they're basically guaranteed to have a significant portion of their earnings siphoned off purely to be allowed to have a place to exist, they would be building up equity in something through those payments...and once they finished paying the purchase price, they would own the place, no longer have to make payments, and be able to sell it on when they decided it was time to move.
Ekaros 4y ago
I never understood why apartments should be treated any different from houses. Any other good reason apart from selfish, I deserve to get own house?

acuozzo 4y ago

> But long term it seems to me that there's no downside to this being punished. It would punish people who need/want to move now, but don't want to sell their current home at a loss or can't sell their home due to market conditions, etc. Landlord(s)-by-necessity, if you will.

nicoburns 4y ago
You could potentially not apply the punitive taxation so long as only one house is owned, regardless of whether they are actually living in it (so renting one property while renting another one would be fine).
ericmay 4y ago
You can avoid elements of the proposal by the OP by selling and moving and then claiming the new primary residence like you do now. I don't think we should care if someone has to sell their current home at a loss due to market conditions because taken to its logical conclusion you're saying people shouldn't lose money which to have a functioning economy you have to reject.
- tzs 4y ago
  > I don't think we should care if someone has to sell their current home at a loss due to market conditions But they are only selling at a loss because under the proposal they would be heavily taxed if they wanted to hold on to the house and rent it out while they wait for the market to get better. > taken to its logical conclusion you're saying people shouldn't lose money which to have a functioning economy you have to reject No, they are saying that you should let people decide when they want to sell instead of making them sell when they will take a loss. That doesn't mean they won't lose money when they sell. It just means they can decide based on market conditions when to sell--which is what you want if you want a well functioning economy.
  - GauntletWizard 4y ago
    A Well Functioning economy is the last thing that the people proposing punitive rental taxes want.

weard_beard 4y ago

Because the financial inefficiencies produced by individual owners currently take the place of trillions of dollars of subsidized housing that would be paid by the government to institutional investors to build and maintain housing affordable to teachers, retail workers, police, and firemen that institutional investors DON'T WANT TO OWN MAINTAIN OR BUILD. I am an individual property investor. I'm a landlord of a single 2-flat up-down duplex. I don't make as much money as I COULD make if I had endlessly deep pockets. It was sold to me by another individual real estate investor who owned and maintained it for 25 years. Do you know why he sold it? He wanted to buy a luxury property that he would make more profit on and require less maintenance. Without individual investors with limited pools of money investing in lower margin properties, simply hoping to augment a retirement account or 401k... Affordable housing would cease to exist.

nicoburns 4y ago
Why would governments subsidise institutional investors rather than simply buying and renting out the housing themselves? (which could be done at cost) I am sympathetic to the idea that individual landlords are better than large profit making businesses though.
- weard_beard 4y ago
  Because governments don't want to be landlords. They don't want to have to orchestrate painting, drywall, gutters, electrical, plumbing, evictions, improvements, picking out tile, providing services that tenants grouped together with limited income might need like domestic abuse resolution and support, job training, food box distribution. Institutions don't want to be in this business either. My wife works for one of the largest ones in the midwest, and trust me, they value the land and developments much more than the rents. Government subsidy is AN incentive to maintain the above services at the MINIMUM viable and provable state to get their handout, but they are NOT landlords. Like McDonalds isn't a food company. They are real estate developers. And the experience of living in a 2-flat or a 4-flat is VERY different from a unit in a 500 person building. The ONLY way institutions would be willing to provide affordable housing would be a constant squeeze on tenants and government and every lever possible to try to make the margins meet that of a luxury apartment. It never will. And middle to low income families WILL SUFFER. A lot. Read this, but replace "burgers" with "rent": https://1851franchise.com/why-is-mcdonalds-considered-a-real-estate-company-2715077 https://1851franchise.com/why-is-mcdonalds-considered-a-real... When given the option of direct cash payments to folks who need it, or giving that cash to an ineffectual corrupt business interest to fail to solve the problem in perpetuity... In America we always choose the later. Especially government.