6 ms·

Tax on non-primary properties solves this if you can get it past vested interests. Reasonable tax breaks for your primary or only home, and none for second hom

Tax on non-primary properties solves this if you can get it past vested interests. Reasonable tax breaks for your primary or only home, and none for second homes / investments you let out. That gives a valve to perform qualitative easing on the housing market whenever you need to, and is not uncommon in other parts of the world. EDIT: Having read the responses below I’ve realised I didn’t clearly word what I meant here, that’s my bad. I mean a holding taxation rather than CGT. Essentially, an elevated annual property tax on non-primary properties that would have the effect of penalising investors relative to those seeking a home to live in.

kwhitefoot 4y ago
You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!
- dirck 4y ago
  There is definitely capital gains tax on non-primary residence homes. Only primary homes are exempt up to certain dollar.
- deleted 4y ago
  [deleted]
- redmorphium 4y ago
  You do pay tax on that. However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.
  - mywittyname 4y ago
    > This is the step-up in basis and is key to building generational wealth in the US. Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny. Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.
    - pksebben 4y ago
      capital gains ought to be taxed like regular income. it's insane that we cut breaks for wealth generation that requires no effort, and is scalable
- amluto 4y ago
  You can do a “1031 exchange” to trade a non-residence property for a different one.
  - mym1990 4y ago
    This is just a tax deferral, you will still pay tax eventually.
    - amluto 4y ago
      Not necessarily. You can hold on to it until you or your spouse dies, which will reset the tax basis.
      - mym1990 4y ago
        Cannot find where spouse dying resets the tax liability. If the outright owner passes away, that makes sense.
- mym1990 4y ago
  There are exceptions if you have lived in the property for 2 of the last 5 years.
bmitc 4y ago
I agree with that. Investment homes, second or maybe just third homes, etc. should be taxed rather extremely aggressively.
- sbarre 4y ago
  The problem with this approach is the impact it has on areas that have availability problems, and where there is more demand than supply for housing (think big cities that are experiencing condo booms). In those high-demand areas, owners will simply pass those tax costs down to their tenants, and the rents prices will go up, leading to even less affordability.
  - triceratops 4y ago
    If you combine that with looser zoning regs, the higher rents will make building more housing more lucrative.
  - bmitc 4y ago
    In my mind, I was separating out homes for rent from investment and second/third/so-on homes. Although, it seems tough to separate those out since investment homes and non-primary homes are often rented out, although sometimes not permanently or continuously as homes specifically treated as rental properties. It needs some more thought, but I don't like the no holds barred approach that takes place right now. I in general don't like homes being treated as a business and investments, and I think it should be discouraged. Apartment complexes are a little different. Even there though, renters need better protection. One of my friend's rent just increased by 25%. It's ridiculous.
  - cwkoss 4y ago
    Make the tax scale with number of homes the entity owns.
  - choward 4y ago
    They might not be able to find someone to pay that rent. In which case they might be forced to sell. Ideally someone who doesn't own a home will purchase it and won't have to pay the tax that caused the original owner to sell.

kwhitefoot 4y ago

You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!

dirck 4y ago
There is definitely capital gains tax on non-primary residence homes. Only primary homes are exempt up to certain dollar.
deleted 4y ago
[deleted]
redmorphium 4y ago
You do pay tax on that. However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.
- mywittyname 4y ago
  > This is the step-up in basis and is key to building generational wealth in the US. Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny. Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.
  - pksebben 4y ago
    capital gains ought to be taxed like regular income. it's insane that we cut breaks for wealth generation that requires no effort, and is scalable
amluto 4y ago
You can do a “1031 exchange” to trade a non-residence property for a different one.
- mym1990 4y ago
  This is just a tax deferral, you will still pay tax eventually.
  - amluto 4y ago
    Not necessarily. You can hold on to it until you or your spouse dies, which will reset the tax basis.
    - mym1990 4y ago
      Cannot find where spouse dying resets the tax liability. If the outright owner passes away, that makes sense.
mym1990 4y ago
There are exceptions if you have lived in the property for 2 of the last 5 years.

bmitc 4y ago

I agree with that. Investment homes, second or maybe just third homes, etc. should be taxed rather extremely aggressively.

sbarre 4y ago
The problem with this approach is the impact it has on areas that have availability problems, and where there is more demand than supply for housing (think big cities that are experiencing condo booms). In those high-demand areas, owners will simply pass those tax costs down to their tenants, and the rents prices will go up, leading to even less affordability.
- triceratops 4y ago
  If you combine that with looser zoning regs, the higher rents will make building more housing more lucrative.
- bmitc 4y ago
  In my mind, I was separating out homes for rent from investment and second/third/so-on homes. Although, it seems tough to separate those out since investment homes and non-primary homes are often rented out, although sometimes not permanently or continuously as homes specifically treated as rental properties. It needs some more thought, but I don't like the no holds barred approach that takes place right now. I in general don't like homes being treated as a business and investments, and I think it should be discouraged. Apartment complexes are a little different. Even there though, renters need better protection. One of my friend's rent just increased by 25%. It's ridiculous.
- cwkoss 4y ago
  Make the tax scale with number of homes the entity owns.
- choward 4y ago
  They might not be able to find someone to pay that rent. In which case they might be forced to sell. Ideally someone who doesn't own a home will purchase it and won't have to pay the tax that caused the original owner to sell.