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My house has an 'unrealized' value yet I have to pay taxes on it based on that unrealized value, which is also a value I can't unlock unless I become homeless (

My house has an 'unrealized' value yet I have to pay taxes on it based on that unrealized value, which is also a value I can't unlock unless I become homeless (a much more difficult situation to be in than being 'stockless'). I can also lose that asset (which is my shelter) if I don't pay that tax on it's 'unrealized' value.

ch4s3 2y ago
A critique of property tax structures as they exist is not an argument for considering unrealized gains as income. One does not logically follow from the other. To steel man property taxes, land is immobile and requires certain government services even when it is unused (perhaps even more-so). Taxing that property is a direct an efficient(from a taxation perspective) way to fund the government services associated with that property.
jonathankoren 3y ago
Nothing stops someone from selling a 3 million dollar Cupertino home and buying a $300,000 home someplace else. So it’s a bit disingenuous to say that person is “homeless”. They’d have a different home and a pile of cash.
- itsdrewmiller 3y ago
  with few exceptions it is even easier for rich people to realize their unrealized capital gains, but they don’t pay tax on them.
voisin 3y ago
I for one would love to know why people are downvoting you as I think you’ve made a good argument. I’d love someone to pipe up with the counter argument.
- slowmovintarget 3y ago
  He did not make a good argument. Property taxes are the cost of the city's government; they include city infrastructure, police, and fire coverage. A poster below answered this. See https://news.ycombinator.com/item?id=40321399#40322190 https://news.ycombinator.com/item?id=40321399#40322190
enoch_r 3y ago
To be clear, you're being taxed on the asset's value, not on the unrealized gain. This conversation seems more like: - you make $100k a year - you pay $20k in taxes - one year, you buy a house for $400k - in the next year, its value doubles to $800k - I say "your income (including unrealized gains) last year was $500k. You only paid $20k in taxes. That's only a 4% rate! How unfair!" Among other things, I find the whole thing silly because of course it'll only be used to criticize the low tax rates of people who have unrealized gains. If Amazon crashes and Jeff Bezos's net worth goes down by $20B and he pays $100M in taxes, no one will write an article about how unfair it is to tax the poor guy $100M on his incredibly low income of negative $20B. Poor guy, he'd probably be the lowest-income person in the whole country!
bitshiftfaced 3y ago
The analogous situation is that the business that you own, which is what the stock represents, also pays property tax. When you sell the house that you lived in, you can get a section 121 exclusion, allowing you to keep the profit tax free.
kcplate 3y ago
> unless I become homeless I have bought, lived in, and sold several houses over my adult life. Never in those transactions was I “homeless” in the colloquial sense. Here is the trick in case you are interested and unsure how to do it—after your closing date is set…you go find another place to rent, you move all the stuff in the home that you are selling to the place you are renting. Then you perform the transaction to sell your home. Go home to your rental place, pour all the cash on your bed you earned from the sale of your home, and roll around in it.

ch4s3 2y ago

A critique of property tax structures as they exist is not an argument for considering unrealized gains as income. One does not logically follow from the other. To steel man property taxes, land is immobile and requires certain government services even when it is unused (perhaps even more-so). Taxing that property is a direct an efficient(from a taxation perspective) way to fund the government services associated with that property.

jonathankoren 3y ago

Nothing stops someone from selling a 3 million dollar Cupertino home and buying a $300,000 home someplace else. So it’s a bit disingenuous to say that person is “homeless”. They’d have a different home and a pile of cash.

itsdrewmiller 3y ago
with few exceptions it is even easier for rich people to realize their unrealized capital gains, but they don’t pay tax on them.

voisin 3y ago

I for one would love to know why people are downvoting you as I think you’ve made a good argument. I’d love someone to pipe up with the counter argument.

slowmovintarget 3y ago
He did not make a good argument. Property taxes are the cost of the city's government; they include city infrastructure, police, and fire coverage. A poster below answered this. See https://news.ycombinator.com/item?id=40321399#40322190 https://news.ycombinator.com/item?id=40321399#40322190

enoch_r 3y ago

To be clear, you're being taxed on the asset's value, not on the unrealized gain. This conversation seems more like: - you make $100k a year - you pay $20k in taxes - one year, you buy a house for $400k - in the next year, its value doubles to $800k - I say "your income (including unrealized gains) last year was $500k. You only paid $20k in taxes. That's only a 4% rate! How unfair!" Among other things, I find the whole thing silly because of course it'll only be used to criticize the low tax rates of people who have unrealized gains. If Amazon crashes and Jeff Bezos's net worth goes down by $20B and he pays $100M in taxes, no one will write an article about how unfair it is to tax the poor guy $100M on his incredibly low income of negative $20B. Poor guy, he'd probably be the lowest-income person in the whole country!

bitshiftfaced 3y ago

The analogous situation is that the business that you own, which is what the stock represents, also pays property tax. When you sell the house that you lived in, you can get a section 121 exclusion, allowing you to keep the profit tax free.

kcplate 3y ago

> unless I become homeless I have bought, lived in, and sold several houses over my adult life. Never in those transactions was I “homeless” in the colloquial sense. Here is the trick in case you are interested and unsure how to do it—after your closing date is set…you go find another place to rent, you move all the stuff in the home that you are selling to the place you are renting. Then you perform the transaction to sell your home. Go home to your rental place, pour all the cash on your bed you earned from the sale of your home, and roll around in it.