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Taking a loan and using something as collateral should be considered a taxable event at that new valuation.
by LanceH 3y ago
Taking a loan and using something as collateral should be considered a taxable event at that new valuation.
- fallingknife 3y agoSo when I take a home equity line of credit on my house, I should have to pay capital gains tax every time I draw money?
- alistairSH 3y agoIf we want consistency with international investments, yes. Related but different point, using homes as massive wealth stores probably isn't ideal for society. It invites all sorts of nasty NIMBYism.
- fallingknife 3y agoI don't like the NIMBY stuff either, but how can a house not be a wealth store?
- vkou 3y ago> but how can a house not be a wealth store? The same way that a car is not a wealth store, but is, instead, a wealth pit. Different tax or zoning rules, 99-year-land-leases, etc, can very well turn housing as a whole from a speculative investment into what it ought to be - a depreciating, but necessary-for-life asset.
- fallingknife 3y agoSorry I have absolutely no interest in a system where the government owns all the land and I just rent it.
- vkou 3y agoAnd I have no interest in a system where a small cabal of speculators are hoarding all the land, and are just collecting rent from me, while providing zero value-add. Land isn't widgets. Unlike industrialists, real-estate 'Investors'[1] aren't making any more of it. The world would go on just fine, better even, if we got rid of all of them. [1] Not to be confused with developers, who actually build useful things.
- jjav 3y ago> And I have no interest in a system where a small cabal of speculators are hoarding all the land, and are just collecting rent from me, while providing zero value-add. According to [1], "the national census identified that owner-occupied households were 60.6% of all household units". While I'd like that percentage to be higher and would also like to prohibit corporations from owning thousands of housing units, let's also recognize that it is nowhere near a "small cabal" who own all housing, when well over 50% is owned by those who live in them.
- jjav 3y ago> > but how can a house not be a wealth store? > The same way that a car is not a wealth store, but is, instead, a wealth pit. That's not even remotely comparable. A car depreciates because it wears out somewhat quickly. A house can last many lifetimes so it's going to retain value for a very long time.
- vkou 3y agoA house requires upkeep and maintenance of both itself and the surrounding municipal infrastructure. Which, over time, will exceed the cost of the house. If you're replacing the engine and transmission and body of your car every 300,000 miles you can also keep it running for a lifetime.
- jjav 3y agoI don't think you can seriously be suggesting these are equivalent. You would have to go to extraordinary efforts to keep a century old car running since everything will be a custom built part at that point. Some people do it but it is a labor of love (for the car itself or for preserving history). People who do it are fully aware you could buy a new car for one-tenth (at worst) of the cost of a restoration. Houses are the exact opposite. Maintaining houses for centuries is normal, you don't run out of parts and the cost to maintain is a tiny fraction of buying a new one.
- aaomidi 3y agoLook at countries where housing is not a wealth store?
- LanceH 3y agoHomes are entirely different as primary residences generally aren't taxed upon sale. Also, their value is regularly updated and taxed at the new value in most jurisdictions. Generally, though, if you're using the value of something, it should be realized (and thus taxable) at that point.