this post was submitted on 01 Apr 2024
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Someone who hords houses.
If you have an beach house that you uses every year, and rents it when it's not using or you have one second house that you got from a deceased family member... If you need to work to maintain this second house...
That's fine. It will not cause a inflation on the house market, it's not just an investment.
In my city (not in US), there are a booming market of very small apartments that rich people buy just to protect their money from inflation. As result, higher prices, less units available for the general public, and the new units that are available are terrible.
We really need to make investing in property less lucrative than other means.
I mean we could start taxing capital gains as income, except no we can't because that would never happen.
Capital gains shows up when you sell. Rental income is taxed as income. Anyone who sells a home, primary residence included, will pay capital gains on any increase in value (deprecation aside) depending on how long they’ve owned the property.
If you just go after capital gains as income, you’re also going after people’s savings and retirement accounts. Not good.
So yeah, people pay taxes on income from and selling a rental.
You’re not going to get what you want by going this direction, and it’s not a good idea.
You need to prevent corporate ownership of and squatting on residential properties. These giant corps create artificial scarcity and fix rent prices, and because they’re corporations, can avoid much of the taxation you and I see. That’s the real issue. Not some guy who owns a couple houses and rents one out.
Unless you just make the tax progressive, like any sane system. It can start at 0 for the average retirement savings amount of capital gains and just go up once you start reaching crazy amounts of wealth
If only there was a single chance in hell of making it happen, yeah.
Capital gains IS progressive. Short term capital gains are taxed as ordinary income. Long term capital gains are taxed according to income bracket and range from 0% to 20%. This year to qualify for the 0% tax bracket a single person would have to make less than approximately $47k. Hardly rich.
We're talking about unrealized gains. Currently only realized gains are taxed.
I would be interested to see data on how much capital gains tax is paid by people in whichever (income) tax bracket, or how people's proportion of income tax vs capital gains tax lines up.
Savings interest and such is already taxed as income, no?
Hitting retirement accounts would make investing enough to retire harder, but tax brackets could be set so as to limit this effect (which, again, wouldn't happen) while still capturing an awful lot of real estate sale income. Almost any house in my city has gone up by enough to immediately put you in upper-middle-class range for your income by itself if you bought it even just a handful of years ago, so selling/trading/working in addition to that would tax the sale significantly.
I get that there would be a burden to "common folk" but I would really love to see how much, compared to closing the easy out for richer folk.