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High property taxes are good

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Re: High property taxes are good

#381

Post by devonkim »

tesseract wrote: post #360
arrosenberg wrote: post #343

Earlier quoted context omitted.

Insured price is based on the structure, not the land. If your house burns down, that's the part they need to spend money replacing. Valuing a structure's replacement cost is (fairly) straightforward based on materials, current labor costs, etc.

And so there is a way to get a reasonable approximation of land value: Subtract the insured value of the improvements (which should be accurate by virtue of being determined by a profitable insurance company in a competitive market) from the appraised property value (which there are generally accepted methods for figuring).

It’s not 100% foolproof but just a rough guide because demolition and waste disposal costs are non-zero. For someone else to use the land my house sits on someone would need to deal with the asbestos likely in various walls. Additionally, things get tricky if the land is found to have historical / archeological relevance which can stop development indefinitely. Commercial developers carry an insurance policy for this I believe.

Re: High property taxes are good

#382

Post by throwaway742 »

abeppu wrote: post #372

If you want to tamp down on speculation, can't we be a little more creative and targeted than just high vs low property tax rates? - Some cities are already getting into vacancy taxes; here the problem seems to be enforcement. No one's going door to door in luxury condo buildings looking for empty ones. - Can a tax due when a property is sold be based on how long the seller owned the property? If you lived there for…

The problem is once you start making complex rules people will start finding loopholes and ways to work around it.

Like you pointed out vacancy taxes are very difficult to actually enforce.

If taxes are based on how long you have owned the property maybe instead of selling the property I give you a transferable 20 year rent to own lease or create a corporation that owns the property and sell you that corporation so that the ownership never changes.

If taxes are based on how many properties you purchase in a year then maybe you create a separate corporation that purchases each property. No single entity has purchased more than one home.

I am not a lawyer and these examples probably aren't that good, but I think you get the point. The simpler the rules are the harder they are to work around.

Re: High property taxes are good

#383

Post by somethoughts »

chadash wrote: post #95
cbm-vic-20 wrote: post #6

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments t…

It will be interesting to see if Texas ends up with some sort of Proposition 13 equivalent given property values and property taxes have been increasing a pretty significant rate.

Fight over increased property taxes in Texas becoming political https://www.youtube.com/watch?v=gzUwoFVUc_I

Texas voters to decide on 2 propositions that could impact property taxes https://www.youtube.com/watch?v=Nz67VXkjRfg

It seems like the Texas Homestead Exemption Act is starting to morph into something analogous to Prop 13. Perhaps if there's enough growth in tech jobs (and more billionaires start hiding out there) they'll end up with an income tax like California and New York.

Re: High property taxes are good

#384

Post by fleddr »

I'm struggling to make sense of the cause and effect in the article:

"The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term."

Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Next:

"This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York."

How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? If so, why not just get rid of speculative buying (simply make it illegal)? What does it have to do with property tax for ordinary citizens?

And what on earth does Chicago have to do with San Francisco or New York?

Re: High property taxes are good

#385

Post by rcpt »

dragonwriter wrote: post #328
rcpt wrote: post #266

Earlier quoted context omitted.

We have that already. The California Tax Postponement Program. It stacks on top of Prop 13. Prop 13 is just a handout, it could disappear overnight and grandma wouldn't have to pay a dime.

> We have that already. Roughly, yes (it's not exactly what I am describing, but pretty close); I’m saying if you are looking for a model to stop that problem elsewhere that has neither, copying Prop 13 (or even just the assessment increase limit, even if applied only to owner occupied primary residence) isn't the thing you should reach for.

Right. But the thing to realize about Prop 13 is that it was passed in malice. Angry voters wanted a "tax revolt" because they were upset with the state. That's why it expands to all property and not just primary residences (Jerry Brown's Prop 8 on the same ballot in 1978 was targeted but voters shot it down).

Of course nowadays it's easier to hire behind grandma than it is to defund school buses.

Re: High property taxes are good

#386

Post by Thrymr »

laverya wrote: post #45
Retric wrote: post #19

Earlier quoted context omitted.

I don’t think that’s a meaningful difference. It would take an extreme property tax to actually incentivize an empty field over productive use of that space. It might in theory make a difference when considering replacing a 40 story building with a 42 story one, but in practice you really don’t see that kind of construction project. In that context pushing for larger jumps before replacement might actually be economi…

Have you ever seen a flat parking lot in the downtown of a US city? Low property tax (because it's unimproved) plus real estate speculation.

> Have you ever seen a flat parking lot in the downtown of a US city?

Houston.

Re: High property taxes are good

#387

Post by enaaem »

chadash wrote: post #95
cbm-vic-20 wrote: post #6

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments t…

Proposed mechanism: You declare the value of your land, but the government can buy it at the declared price if they want to. This also makes land acquisition for infrastructure straightforward and transparant.

There is a risk that the government will increase taxes such that people can't declare high land prices, which allows the government to buy up land for cheap. I haven't found a mechanism for that yet.

Re: High property taxes are good

#388

Post by renewiltord »

horsawlarway wrote: post #264
raldi wrote: post #246

Earlier quoted context omitted.

Just let property owners declare a value for their land, and give anyone the right to buy it for 120% of that value at any time, with the existing owner given a grace period where they can restate their estimate.

My strong suspicion is that this will completely fuck over the elderly and marginalized communities. It also requires property owners to do EXTENSIVE research and information gathering CONSTANTLY to ensure that the number they put down is reasonable. Many of them literally can't (ex: my 87 year old Neighbor Phylis doesn't care what her house is worth, because she plans to die in it, and isn't seeking to maximize util…

The usual solution to that is a property tax deferral to death or transfer. Phylis would pay nothing, but her estate would be required to.

People will revolt anyway. For instance, in California they revolted when we attempted to remove Prop 13 for businesses.

Re: High property taxes are good

#389

Post by TimPC »

Retric wrote: post #297
laverya wrote: post #45

Earlier quoted context omitted.

Have you ever seen a flat parking lot in the downtown of a US city? Low property tax (because it's unimproved) plus real estate speculation.

You might be surprised just how profitable those parking lots can be. Putting in a 10 to 25+ million dollar multiple level parking garage can pay off, but only if there is enough demand for it and you can get zoning permission.

We aren’t talking multi-level though we are talking about an actual flat parking lot in the middle of a downtown core which is what speculators do and have done in my city while they wait to sell expensive land.

Re: High property taxes are good

#390

Post by negamax »

fleddr wrote: post #384

I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high propert…

What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check
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