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

economist.com

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

#731

Post by yrgulation »

nemo44x wrote: post #606
yrgulation wrote: post #548

Earlier quoted context omitted.

Where in the west? In europe we use concrete and bricks, while the us something else. I believe anyone in the construction business will be able to explain that the most expensive part is the land actually. At least in europe. In the uk for instance, the exact same new house, exact same materials, can be 100k GBP less in a cheaper area. Or even half in extreme cases.

European homes tend to be much smaller than American homes and are very rarely stand alone single family homes. I get to the UK often and almost everything is connected and have small little “gardens”. This is fine and it makes for cheaper construction since there are far less materials and labor is shared across many homes. The hones are tiny by American standards too. We don’t have this as much in the USA. People g…

The uk is a bit of an exception. The norm in continental europe is standalone homes and usually much larger. Europe is a diverse continent with varying property size and expectations.

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

#732

Post by vintermann »

nly wrote: post #628
aorloff wrote: post #561

Earlier quoted context omitted.

The mortgage interest deduction is for your primary home. Investment property mortgage interest is a business expense

It's wild to me that Americans can deduct mortgage interest from their tax bill ...

This is very common. We have it in Norway too. It started in 1882. At that time, it was mainly farmers who had mortgages, so the idea was to encourage productivity, making it less costly for them to buy new land for cultivation (You might wonder, wouldn't this just drive up land prices? I wonder, too.)

But once you have them, they're hard to get rid of. When they were in charge for 40+ years, Labour defended them because they wanted to push for homeownership so working people didn't have to live at the mercy of landlords. In the 80s I believe they considered changing it, but then the Conservatives (who of course benefit disproportionately from the deduction) were in a position to block it. These days there is an interest deduction on ALL loans, not just mortgages. Why and how that happened I have no idea.

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

#733

Post by brnaftr361 »

rootos wrote: post #421
effingwewt wrote: post #334

Earlier quoted context omitted.

And it gets better! They now have the added buffer of rental/leasing agencies! Many of these are fly-by-night and skirt or outright ignore inconvenient laws like renter's rights. Repairs? Cost sink, just don't renew complaintant's lease. Bonus you get to raise the rent again! Want to get in touch with the owner? Most times you'll have to look up tax records and hope it's actually in the owner's name. Makes rental pro…

Rental/leasing agencies can ignore laws...but the courts don't. And the machinery of law enforcement, from bailiffs to cops to IRS revenue agents, keep both sides somewhat in line.

That's cute, but 95% of people don't have the time or money for pursuing justice, myself included.

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

#734

Post by refurb »

nly wrote: post #628
aorloff wrote: post #561

Earlier quoted context omitted.

The mortgage interest deduction is for your primary home. Investment property mortgage interest is a business expense

It's wild to me that Americans can deduct mortgage interest from their tax bill ...

Americans used to be able to deduct interest from their credit card bills until the mid-80s.

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

#735

Post by refurb »

kelnos wrote: post #654
toss1 wrote: post #416

Earlier quoted context omitted.

The rebuttal by mminer237 is much closer to right [0]. Also it isn't even as good as mminer237 mentions, as many states also have a much lower exemption, and there is work in congress to get rid of the step-up in basis (a bad thing, imo) and to reduce the $12MM lifetime gift & estate exemption (a very good thing). So yes, there are some advantages, but OP is vastly exaggerating as if it is some freebie to landlords w…

It may not be a freebie for landlords, but it is much more "cost neutral" or "tax neutral" to own an investment property than to own a primary residence. Consider: Investment property: * Deduct maintenance costs * Deduct insurance costs * Deduct property taxes * Deduct mortgage closing costs * Deduct mortgage interest * Deduct HOA dues * Deduct property management fees * Take advantage of depreciation deductions * Av…

I mean it should be lop sided no? One is running a business and one is for personal consumption.

If I go and buy a half lamb for my personal consumption, I can't deduct it from taxes.

If I buy half a lamb, cook it and sell, I can deduct the costs because it's a buisness.

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

#736

Post by vintermann »

toss1 wrote: post #710
kelnos wrote: post #654

Earlier quoted context omitted.

It may not be a freebie for landlords, but it is much more "cost neutral" or "tax neutral" to own an investment property than to own a primary residence. Consider: Investment property: * Deduct maintenance costs * Deduct insurance costs * Deduct property taxes * Deduct mortgage closing costs * Deduct mortgage interest * Deduct HOA dues * Deduct property management fees * Take advantage of depreciation deductions * Av…

Of course there are more deductions when an object is a BUSINESS instead of a piece of PERSONAL PROPERTY. No, it does not seem the slightest bit lopsided. There is zero difference between the deductability of expenses you mentioned and expenses for any other business. Businesses are generally taxed on their PROFITS , which are [INCOME] MINUS [COSTS]. The regular homeowner is not running a business. The same thing is…

> Businesses are generally taxed on their PROFITS, which are [INCOME] MINUS [COSTS].

Sure. But why does it get such a sweet deal?

It's because we want to encourage business, since businesses produce things of value.

But how much does a landlord actually produce things of value, and how much is he just extracting value others are producing (a.k.a "rent")? That's an important thing to consider when we look at having this tax/tax break or not.

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

#737

Post by goodpoint »

refurb wrote: post #699
goodpoint wrote: post #209

Earlier quoted context omitted.

> Creating competition and innovation in consumer goods is one area it's obviously very good at. Not really.

Ah yes, the non-capitalist nations are known for their broad selection of consumer goods, competition and cutting edge innovation, right?

Wrong.

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

#738

Post by mupuff1234 »

groby_b wrote: post #317
l33t2328 wrote: post #224

Earlier quoted context omitted.

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

I mean, we can solve that problem by a 100% inheritance tax so they don't leave an obligation. No? Then maybe let's skip arguing in sound bites. Personally, I think the answer here is a continued and ongoing land tax. Occupying land should come with an expectation you contribute to the common good, because you don't "own" land. It's a shared good, just like air and water, and you should pay for use. Primary residence…

Adding tax loopholes is almost always bad imo, and usually taken advantage by those with means.

What you'll end up with is people "relocating" for a year to avoid paying inheritance tax.

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

#739

Post by smcl »

kgwgk wrote: post #636
smcl wrote: post #629

Earlier quoted context omitted.

Ok but they also provided a link showing how this also applied in Amsterdam, in The Netherlands - a much older and less-empty country.

That link doesn't show that housing was not an investment for centuries, does it? Why wouldn't you consider an investment something that has a relatively stable value in real terms - at least over a long enough period - and also provides a yield?

The link supports the statement "housing tracked inflation for 400 years". I think the confusion here is the word "investment" is overloaded and could refer to a number of different things regarding property:

- you buy the property that you personally will live in

- you buy some other property and let it out to tenants or businesses

- you are a pension fund, mutual fund, hedge fund, day trader, bank, HFT etc which trades in derivatives based on mortgages

The first two have been going on for centuries at some level. The third only really got going at the point house prices completely disconnected from inflation.

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

#740

Post by pas »

fezfight wrote: post #703
pas wrote: post #404

Earlier quoted context omitted.

Vacancy rates are low, investors don't just sit on the units.

They had to add a tax to empty homes in Vancouver to try and recover some of the units lost to investors just sitting on them.

[citation needed]

A tax was established, yes, but was it reasonable to do so (was it reasonable to expect that it will do much) and did it do anything? It seems the answers are no to both those questions.

I think it's a good signaling tax though. (I'm 50-50 on the extra tax for foreign buyers. Ethically there shouldn't be any difference based on where one's passport is from, but practically of course there is.)

Anyway, the real problem is constrained supply. Vancouver is still a fucking suburb compared to dense cities.

https://www.youtube.com/watch?v=evYOhpjMql0

https://www.statista.com/statistics/960174/vacancy-rates-res...

https://www.cbre.nl/-/media/cbre/countrycanada/images/insigh...

https://vancouversun.com/business/real-estate/three-years-in...

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