> slap a 100% capital gains tax on any property that is not owner-occupied
This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell?
Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option.
> Resale value would plummet if properties were taxed more, especially if extra onerous taxes were put on foreign investors. This would discourage rich dirty-money investors using central London property as an offshore savings account.
Another idea that just jumped to my mind: why not tax any capital gains on property sales by 100%? Of course, deduct the inflation over the time the property was held by the owner, and in case the value of the property was increased by e.g. upgrading it, also deduct these costs and 5% margin for this investment... that would essentially disallow property investment.
Homes are made for living and profits should be made by living in the property or by renting it out.
> Residence-first real estate policy needs to include tax that increases on the number of properties owned (and maybe even more steeply in a supply constrained market).
People might try to get around this by forming corporations or trusts that hold max one property each. There is really no need to count how many other properties someone holds. Just do a re-assessment every year and ratchet up the assessed value on all housing that the owner does not occupy, including vacant property and renter-occupied. Seems a lot simpler.
As written on that wiki page it’s completely impractical:
> Others are able to purchase the property from the owner at the taxed price at any time, forcing a sale.
The idea is apparently supposed to “improve societal welfare”, but the reality is it would favor the wealthiest who could afford to have and hold property, while everyone else would be at the mercy of those richer than them.
> I personally think people's first property should be tax-free. their actual home.
This is how it works in Canada: principle residence has no capital gains on sale.
If you move to a new place, and don't sell the old one, then you have to change its status and the clock starts ticking on any price appreciation after the status change. Further if you rent out part of the structure (e.g., basement), then you have to pro-rate a status change of the property (generally proportional to surface area) and declare rental income.
> And tax vacation homes heavily: if you don't live in your house at least 240 days a year (roughly, 8 months), then your property taxes will be 10% of the house's appraised value.
This has been tried. The problem is, the people who can afford to drop $2M+ on house and land for a home they barely visit are not going to be phased by a 10% value tax.
> The government will also impose higher taxes on people who sell their home within a year.
Why would they raise taxes on people who decide to sell? Raising taxes on sales will decrease the number of sellers. If the goal is to decrease the price of housing, they should want to increase the number of sellers (partly by reducing taxes on sales) to increase the supply of housing.
> to include homes owned and occupied by able-bodied people who don't work for a living and never earned the kind of money that would be needed to afford such a home.
That sort of means testing isn't required (and would be open to system-gaming / perverse incentive creation anyway). You just apply capital gains tax to all properties with the exception of one primary residence per person, and you could even cap the primary-residence exemption at the median value of a home in a particular area. So if you own property and rent it out rather than living there yourself, it gets taxed as an investment, period.
So that this cost isn't just passed on to renters, you should make the rental payments for your primary residence tax deductible, again perhaps capped at a median level so as not to perversely encourage higher rents.
I think you could construct a tax regime that was revenue neutral pretty easily this way.
I’ll say it again: it’s absolutely irrational that we encourage flipping through our tax system. Short-term capital gains on housing should be taxed at 100%.
Really tired of the HN thought-police censoring ideas by downvote. If you disagree, reply and make an argument.
> This means that people owning property with a mortgage would suddenly be forced to sell their property at the near zero prices that Georgism is designed to foster.
Not necessarily. Relatively few homeowners occupy all that much land value; it's probable that most homeowners' dividends would entirely offset their tax burdens, in which case they stand to benefit if anything.
> This is the step-up in basis and is key to building generational wealth in the US.
Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny.
Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.
> What happens if legislation is passed that more or less prevents people from owning property that's not their primary residence? Like: if you don't live in it more than 190 days a year, you pay a really high property tax on it.
That already exists in a way - there's the concept of a primary residence tax deduction, which is (more or less) what the name sounds like.
It varies widely by jurisdiction, (not just country, but state and local government as well), but the idea of trying to differentiate residents from landlords in tax policy is nothing new.
> It also encourages debt and is effectively a subsidy to banks
I have no idea who is downvoting you. That's absolutely correct.
If they really wanted to subsidize ownership they would make it tax deductible to pay down principal. (And then give you zero tax basis so it's all taxable income when you sell, and cap the maximum sunk deduction per person at the median home value so rich people don't buy twelve houses to avoid their taxes.)
It would tax house owners less than people who had same amount of money but didn't buy house and kept money in bank. If both house owner and renter had $1000 in bank, they would lose the same.
I think the counter argument is this is used to discourage residential investment properties to the point where you’re either land banking or you sell it because it doesn’t give you the income you want. Hopefully local taxes will discourage the former.
> Why not regulate the amount or at least the velocity of how many homes a person can own?
That is something that could be done, to a degree.
You can increase transfer taxes and offer a partial refund over the course of some number of years, provided that the home has the homeowner exemption in place.
Increase the property tax rate while also increasing the homeowner exemption so that the total tax paid is the same as it was before.
On my personal wish-list of reforms is an incredibly high (say, 90%) tax on short-term capital gains for real estate investments.
The whole justification for the mortgage interest write-off (which is otherwise just a gigantic government handout to property owners), is that it promotes home ownership, the family unit, etc. The problem is, there's no equivalent dis-incentive for short-term speculation on property, and what was intended to be an incentive for family home ownership actually helped to fuel the ponzi scheme that is effectively driving families out of their homes today.
If short-term gains on home sales were taxed at very high rates, it would basically be impossible for "investors" to flip homes for short-term profits. A huge incentive for speculative price increases in the housing market would be eliminated.
(Plus, no more stupid TV shows about house flipping. It's win-win!)
> This inevitable consequence is that people would be forced to "value" their house at the maximum they think it might be worth in 12 months time or risk losing their home, or even higher to signal that they really don't want to leave their home, all the while paying more tax than they need to because the actual market price for houses would be lower.
This is mostly a thought experiment so there is not an actual detailed implementation plan by the authors. But my sense was that it's not that you actually have to sell immediately but more like someone can offer to buy at $X and then you either have to sell or $X becomes the new declared value for future tax payments.
This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell?
Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option.
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