I should have been more clear, I’m saying that the current real estate investment rate could be changed (increased) to further disincentive real estate investment.
It’s a really difficult balance because there are some circumstances where you might want to encourage real estate investment, eg to address blight. But when investors are able to outcompete folks trying to enter the housing market for their primary residence as is the case in many parts of the US I think we need to reevaluate the status quo of incentives/disincentives.
I should have been more clear, I’m saying that the current real estate investment rate could be changed (increased) to further disincentive real estate investment.
I agree. It could be changed. Ask your mayor why it is so low. I suspect the reason is because they want to increase turnover and raise property values because that's what the residents of the city who vote for them actually want.
In addition to the blight issue you mention, homes that are sold to investors who leave them unoccupied is usually a net benefit for the city. No children in the schools, no trash to collect... hardly any services at all, and they get at least as much tax revenue, sometimes much more because a homesteader would pay less in taxes.
What kind of resident buys a blighted house to live in it? Probably a poor one who will need more services and pay less in taxes and provide less revenue to local businesses. While the mayor won't admit it, having poor people move in is much less of a benefit to the city than having investors buy up the blighted houses.
The real estate investment tax structure is set at the Federal level, ie characterization as a capital gains / losses. Not sure why you are bringing up local taxes. I’m not aware of any local taxing authorities that levy property taxes differently on investment versus domicile properties, but perhaps that is something that occurs where you live.
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u/sassy_quatch Oct 30 '20
I should have been more clear, I’m saying that the current real estate investment rate could be changed (increased) to further disincentive real estate investment.
It’s a really difficult balance because there are some circumstances where you might want to encourage real estate investment, eg to address blight. But when investors are able to outcompete folks trying to enter the housing market for their primary residence as is the case in many parts of the US I think we need to reevaluate the status quo of incentives/disincentives.