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Housing is at the root of many of the rich world’s problems (2020)

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Re: Housing is at the root of many of the rich world’s problems (2020)

#301

Post by dbjacobs »

huevosabio wrote: post #281
mminer237 wrote: post #192

Earlier quoted context omitted.

You don't write off your rental income. You depreciate the rental property over 27½ years and write that off against your rental income. Few rental properties will have under a 3.7% ROI where depreciation would cover all the income. At best you might be paying half tax. In your example, you'd pay no tax, but you'd lose out on the potential income you could have had with better investments (and lose about 6 years' wor…

You fix it by deprecating only the improved value. The land beneath a building does not deprecate, whereas the value of the building should. Since for most properties the majority of the value is in the land itself, your basis to deprecate would be much lower, and more realistic.

This is already the case. You can only depreciate the building value not the land portion. So single family homes have much lower depreciation since most of the value is typically in the land vs an apartment which is the opposite.

Re: Housing is at the root of many of the rich world’s problems (2020)

#302

Post by pdonis »

dont__panic wrote: post #257
pdonis wrote: post #223

Earlier quoted context omitted.

> You only need one house to live in. Many people do not want to own a home, they would rather rent. Someone has to be the landlord for all those people, and to all those someones, the home is an investment. You can only get rid of homes as investments if you get rid of renting.

> Many people do not want to own a home I hate to go all "citation needed" on you, but I'm not sure this is true. Do I want to pay for upkeep of a property? Probably not. But since renting is basically equivalent to burning money in our economy, any responsible renter will eventually feel a pull towards ownership if only to stop the bleeding. I think we need a society where renting isn't so expensive AND owning a pro…

> I hate to go all "citation needed" on you, but I'm not sure this is true.

Given the number of people that rent in large cities all over the world for their entire lives, I don't know why you would find my claim doubtful. Many people seem to want to live in large, densely populated areas, and for most people that is always going to mean renting.

> Much like freedom of car-free movement, housing ought to be a fundamental human right

I disagree with this as a blanket statement; neither car-free movement nor housing as a basic right will ever work in areas that are not densely populated. And many people (including me) want to live in areas that are not densely populated. We are quite willing to pay the costs of doing that and don't need handouts.

However, in densely populated areas, I think many people would agree with your statement--but I think they would also say that "housing as a human right", for them, means availability of affordable rentals, not home ownership.

Re: Housing is at the root of many of the rich world’s problems (2020)

#303

Post by wyre »

dougmwne wrote: post #130
strikelaserclaw wrote: post #33

Earlier quoted context omitted.

the fatal flaw in capitalism imo, a lot of wealth gets created which is good for everyone but eventually, a lot of that wealth also gets held by a smaller and smaller minority while the rest try to desperately compete over whatever is left over. After a certain point a certain portion of any new wealth created somehow trickles up to the capital owning class (think your VC's, fund owners, other rich investors), this c…

Not sure I agree with this worldview. The real currency of the world is labor, at least until we invent AGI. People need to be a certain amount of hungry before they will labor. Our current system supports a good number of older people being supported by the labor of younger people. That capital cannot magically increase the labor force and when you dump more capital into the system outside of a recession you get inf…

I’d say productivity is more of a currency than labor. Sisyphus isn’t producing anything, but sure is laboring a lot. The industrial revolution was huge, not because it had a lot of laborers but because the laborers were able to be more productive with their labor.

Re: Housing is at the root of many of the rich world’s problems (2020)

#304

Post by seiferteric »

ROTMetro wrote: post #283
namdnay wrote: post #267

Earlier quoted context omitted.

In what universe does paying tax on what you inherit equate to communism?

When you effectively take someone's home for government benefit. People think that when they buy property they own it. You're model is more the China version. You don't own property, you only lease it from the government. Hence, your model looks more like the communist model than the traditional Western one.

Inheritance = Income, and income is generally taxed. The fact that that inheritance might be real estate is irrelevant.

Re: Housing is at the root of many of the rich world’s problems (2020)

#305

Post by noahtallen »

mschuster91 wrote: post #5
mantas wrote: post #2

Not housing per-se, but concentrating too many jobs in few locations. Which causes issues with housing.

> Not housing per-se, but concentrating too many jobs in few locations. Jobs weren't "concentrated" per se by any form of planning or centralized action, employers simply shifted to urban centers because the amount of skilled workers and other necessities (such as high speed Internet, universities, road and rail infrastructure) was vastly higher there than in dilapidated flyover-state villages. Additionally, rural ar…

> The fix to the housing crisis would be to invest in rural areas again

There’s actually a really big, fundamental problem with this approach. Cities hugely subsidize rural infrastructure already. Tax income generated by rural (and even suburban) developments can’t repay the construction and maintenance cost required for upkeep. Partly because it’s not dense, and partly because typical rural/suburban economic development looks like a stroad with chain restaurants and huge parking lots. (Where most of the land isn’t being economically productive, and the land that is isn’t really boosting the local economy that much.)

https://youtu.be/7Nw6qyyrTeI

Re: Housing is at the root of many of the rich world’s problems (2020)

#306

Post by phil21 »

l33t2328 wrote: post #224
seiferteric wrote: post #218

Earlier quoted context omitted.

If you had to pay the tax you could probably just finance it anyway instead of paying it all at once so it would be just like having a new (small) mortgage.

That’s what every parent hopes to leave their kids with: an obligation

I'm pretty sure my kid would be quite happy if I left him a million dollar asset that he just had to figure out how to pay capital gains taxes on.

If he wasn't I probably did an extremely poor job of financial education while I was alive.

Re: Housing is at the root of many of the rich world’s problems (2020)

#307

Post by fwsgonzo »

ROTMetro wrote: post #287
2OEH8eoCRo0 wrote: post #234

Earlier quoted context omitted.

> unless your estate is over 12 million dollars(and double that for a married couple), you pay no estate taxes. Why aren't estates just taxed as income to the entity who it goes to? If my father croaks and leaves me $1m it should count as an additional $1m of income to me that year.

Fine, as long as you tax based on what was paid for the property. The father is giving his invested money, no one chose to 'realize' at the current valuation, it is happening because of a traumatic family event.

That sounds fair to me. I wonder if there any countries already doing it this way?

Re: Housing is at the root of many of the rich world’s problems (2020)

#308

Post by [deleted] »

namelessoracle wrote: post #216
namdnay wrote: post #173

Earlier quoted context omitted.

> If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. so if they can't afford to pay tax on the windfall, they'd have to sell the house and buy a smaller one. is that the end of the world? > Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill what…

So a family on hard times should be forced to leave their grandmothers home when she dies and hope they can find a new one? Gentrification can easily push a property in the place they've lived their whole lives out of their price range. And the family home might not have been super well kept up so the "windfall" isn't as big as the property values in the area may reflect. This happens now with gentrification in big c…

[deleted]

Re: Housing is at the root of many of the rich world’s problems (2020)

#309

Post by Supermancho »

adamsmith143 wrote: post #243
Supermancho wrote: post #230

Earlier quoted context omitted.

> 15000 in rental income doesn't even cover half of your Mortgage That depends on how much you put as a down payment. Work backwards from the payment to make it sensible.

Give me a break. You'd need a down payment of ~400K to have a mortgage low enough to barely break even at $15,000 in rent per year. None of his math makes sense. Of course you would really rent a 500k property at something more like 2500 a month but even then you'd need a down payment near 200k to start making a profit.

Here's a mortgage calculator: https://www.google.com/search?q=mortgage+calculator

500k property at 2.75% is $200k down gets you under 15k (this is very similar to my current mortgage)

Now you're going to object that the interest rate isn't that anymore, which is irrelevant. There are numbers that will work which are simply an example to illustrate how depreciation works, and you just don't like the arbitrary scenario.

The math makes sense.

Re: Housing is at the root of many of the rich world’s problems (2020)

#310

Post by kgwgk »

pessimizer wrote: post #249
axg11 wrote: post #141

Earlier quoted context omitted.

When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of places in the US/Canada/UK where housing is cheap. The problem is that nobody wants to live in those areas.

> When was housing not an investment? Housing was never an investment before recent decades, with an emphasis on the housing bubble. Housing tracked inflation for 400 years . https://thegoldobserver.substack.com/p/amsterdam-real-housin... edit: the history of US house prices is that they strictly tracked inflation, then with government subsidy right after WWII, housing prices jumped up, then stayed flat at that new l…

“In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7% per year. Housing outperformed equity before WW2. Since WW2, equities have outperformed housing on average, but only at the cost of much higher volatility and higher synchronicity with the business cycle. The observation that housing returns are similar to equity returns, yet considerably less volatile, is puzzling.”

https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.p...

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