Switzerland: How buying real-estate can kill you financially/reasons for stocks

> force them out of cities

Could you give an example of this happening within a country as a whole? People may abandon city X for city Y or move to suburbs, but what more usually happens in a depression is homelessness within the city or extreme densification (sharing rooms).

Nope, that's not how prices are set.

https://www.quora.com/How-does-a-land-value-tax-not-create-d...

For instance, Canada (which, despite its resource based economy, is generally seen as fairly similar to the US) has no mortgage interest deduction, doesn't permit mortgages for terms of longer than 5 years (amortization is generally for 25 years but you refinance as a matter of course at least every 5 years), and generally provinces are more tenant-friendly than the most tenant friendly US states (e.g. California) with things such as limiting rent increases based on government inflation figures. The tax rules around exempting capital gains from the sale of a primary residence are also different in Canada - more generous but also with more stringent requirements.

For anyone reading this in the US: don't take this at face value.

This (my opinion) is coming from someone who's indifferent between renting vs. owning, so is trying to make the decision purely on financial factors.

Reasons why this article does't apply in the US:

(1) The "eigenmietwert" the author writes about is known as an "imputed income tax". The idea is, most assets generate income: bonds pay interest, stocks pay dividends, etc. A house, which is an asset, always generates economic benefit, it's just a question of the owner (who lives in it), or to a renter (who pays rent). When you think about it, it's kind of absurd that in the US, an owner pays income tax if they rent their house to someone else, but not to themself. Taxes like this are an attempt to level the playing field.

(2) The US allows homeowners to deduct mortgage interest (up to a point) from taxable income. Why you can't deduct interest on credit cards or auto loans, but you can on mortgage interest, beats the hell out of me?

(3) The US taxes capital gains. California, where I live, has a state-level _surtax_ on capital gains. I'm not sure whether the author is correct about Swiss tax treatment of capital gains, but have no reason to think he's wrong.

(4) Interest rates are artificially cheap in the US, as some others have pointed out, due to GSE interference in the mortgage market. There's absolutely no reason Fannie/Freddie should encourage people to buy houses. I also think it's ridiculous that the FHA uses taxpayer funds to let low-income borrowers get cheap loans. Let them rent. Renting isn't some kind of hardship, in many ways, it's better than owning, you have less downside risk and it's easier to relocate for a job.

(5) In places like California, where we have Prop 13, property taxes don't reassess -- ever. So, barring a sale, someone who bought a house 30 years ago pays essentially what they paid in property tax then, now. This encourages exactly what you'd think, people move less and try to stay in their homes as long as possible, even performing absurd tax gymnastics like "one-wall remodels" to avoid having their tear-down "remodels" reassessed.

(6) "1031 exchanges" and other gimmicks let property owners sell their properties--AT A GAIN--and trade up to a larger place, without ever paying tax. How crazy is this!?

(7) In most jurisdictions, property taxes are federally deductible; I get no such deduction as a renter, though it could be argued that my rent is lower as a result (due to the owner's tax writeoff).

At bottom, this stems from a cultural attitude we have in the US (really the entire Anglosphere) that homeownership is some sort of God-given right/natural thing to aspire to. I wish this attitude would change. I wouldn't mind renting but it's hard to justify given how tilted US law is toward homeownership.

Which other "Anglosphere" countries promote home ownership the same way that the US does with e.g. mortgage interest deductions? There are many pairs of otherwise culturally similar countries with differing policies on this (e.g. US & Canada, Belgium & the Netherlands).