Landlords should have to pay income tax on their rental properties regardless of whether they're rented out or not. ( gothamist.com )

cross-posted from: lemmy.crimedad.work/post/12162

Why? Because apparently they need some more incentive to keep units occupied. Also, even though a property might be vacant, there’s still imputed rental income there. Its owner is just receiving it in the form of enjoying the unit for himself instead of receiving an actual rent check from a tenant. That imputed rent ought to be taxed like any other income.

bluGill ,

What are the unintended consequences of this proposal? It is amazing how many people replying to this topic have proposed something without considering what effect it will have. Sure there is a problem, but most solutions have serious negative downsides.

krashmo ,

I don’t think people care about the downsides for landlords anymore. Real or imagined, perceived greed is what people blame for high rent costs. They’re ready to make greedy landlords suffer as they have and I can’t say I blame them one bit.

BraveSirZaphod ,
@BraveSirZaphod@kbin.social avatar

The fundamental misunderstanding in this view, IMO, is that greed is not something that landowners are uniquely equipped with. Rice is cheap as hell; are rice producers simply not greedy, and that's why rice is cheap? No, it's because an absolutely massive amount of rice is produced every day, and there's more than enough around to ensure anyone who wants rice can get it. Slightly more abstractly, there is more than enough supply to meet the demand. And like housing, cheap food is an absolute need. But unlike food, housing has been woefully underproduced for decades now in cities, and government policy has done a lot to cause that. It's illegal to build denser than single-family homes in most urban land, and the aim of policy has been more to protect people's investments rather than have housing be affordable - two goals that are fundamentally at odds with each other.

This isn't a coincidence, of course. A lot of federal housing policy goes back to the 50s and 60s, when you had suburbs that literally banned people of color from living in them. Housing policy was explicitly designed to advantage landowners and penalize renters, which is to say, wealthier white families pursuing The American Dream™ and urban Black families whose neighborhoods were systematically redlined and demolished to build highways for white suburbanites.

krashmo ,

Sure, all that’s true, but it doesn’t invalidate what I’m saying. I think people are angry and ready to get out the pitchforks. There’s been decades of policy debate with no actual improvements to the situation. People think politicians and the wealthy are using discussions like the one you’re trying to have to delay meaningful change rather than find an agreeable solution for all parties. That’s not to say you’re wrong but you’re assuming people want to avoid punitive action and I don’t think that’s true.

BraveSirZaphod ,
@BraveSirZaphod@kbin.social avatar

Totally agree with you; this frustration is a direct and obvious result of decades of policy failures. I just worry that a lot of the ensuing anger is a bit misplaced.

I do think that there's been a sharp acceleration in recent years towards actual concrete steps, even though they're not super flashy and will take more time to see results. There's been real progress towards zoning reform, abolishing parking minimums, and other bits of red tape that have played a huge role in housing costs exploding.

krashmo ,

It probably will end with some poor decisions being made but sometimes a bad decision is all you can get. Hopefully it will get more meaningful discussion going at least.

Speaking of which, I appreciate your point of view and your demeanor. Civil discourse seems pretty rare these days.

BraveSirZaphod ,
@BraveSirZaphod@kbin.social avatar

Same here! It's not often you get a online discussion about economics or housing policy that's civil and productive.

Turkey_Titty_city ,

The landlords have much bigger pitchforks. Called the police, and the city government.

and they will fight any and every expansion of the housing market in order to protect their power and further increase housing values.

emeralddawn45 ,

What downsides? You come out talking about unintended consequences but give no examples.

bluGill ,

Look at all the different responses to this post. I've given many different answers to different proposals.

Zink ,

Many landlords don’t even pay taxes on the money they DO make.

They can depreciate a property to offset their income, even though the property is going up in value. The catch is that they have to pay taxes on more of the money they get from selling the property. But if they don’t sell, potentially no taxes for decades. And if they leave it to their kids in their will, no taxes there either and the kid’s cost basis in the property is the market value at the time they received it. So they can start the depreciation all over again.

This is how my non-expert self understands it anyway. It’s part of what draws some people into real estate.

taco_ballerina ,

More than that. You can depreciate the building (but not the land) to offset tax on the income but the bill eventually comes due because by depreciating it you’re lowering your cost basis. For example you buy a property for $150k. If you depreciate it long enough it’s worth $0. If you then sell it for $350k you have to pay tax on all $350k, not just the $200k gain in value.

However If you intend to use the proceeds from that sale to buy another investment property or properties you can do a 1031 exchange to roll your adjusted basis into the new property. Thus even when you sell it you don’t have to pay the tax.

As you might, expect tax laws are written to benefit constituencies that politicians value highly. Wealthy donors are among those constituencies.

blueskycorporation ,

Once the property is fully depreciated, the trick is to do a 1031 exchange to buy a new one, and then you can depreciate the new one.

captcha ,

Sound like basic Henry Georgism.

keepcarrot ,

Some places do have an estate tax (inheritance tax?), but there are often many ways around it and as such class still exists in the UK (say) with its 40% estate tax.

I’ve also heard that the tax can result in an enormous bill to a family that suddenly has a single expensive illiquid asset. Far be it from me to shed a tear for people inheriting over a million dollars or whatever, but it does mean you give up your modest family home in an area whose land value has gone up.

There’s an argument going on elsewhere in the thread whether you’d prefer the government be your landlord, which: a) Yes, in my country. Flat yes. The rate of public housing to demand is quite poor though, but it does exist. And I’ve lived in worse, more expensive, private rentals. b) Cuba has a “rent to buy” system which funds new housing while also meaning that you still build equity on a home over your lifetime. So the government is your landlord but not permanently. And Cuba has less homelessness than much much richer countries. (and c) I’m fine with living in a grey commie-box, but whatever)

At least here in Australia, I’d at least want to see landlords politically disempowered. It’s actually quite hard to find any politician that doesn’t get passive income from owning homes, let alone their portfolio growing in value due to asset appreciation.

SootyChimney , (edited )

Let’s be clear, in the UK, parents can almost always leave behind over a million pounds worth before any tax starts kicking in. Not to mention the thousands of easy ways around it.

keepcarrot ,

Yes

Zink ,

Haha, in the US it’s more like $25 million for a couple. Though I see that in 2026 it’s slated to drop to only $14 million per couple.

bigschnitz ,

So a less efficient and more complicated land tax? Is there any benefit to this compared to just taxing based on the value?

GreyEyedGhost ,

The idea is to make it financially uncomfortable to retain real estate in a manner that harms society.

Pipoca ,

That’s literally what a land value tax does.

GreyEyedGhost ,

For as long as I’ve been alive, one of the lines I’ve heard is that real estate is always a sound investment. There have also been land taxes for that entire time, most of them being land value taxes. The evidence suggests that the most common form of land value tax, which does not consider how many residential properties an entity owns, is not doing much, if anything, to disincentivize purchasing residential properties as an investment.

Pipoca ,

Land value taxes are quite rare in the US.

A property tax and a land value tax are a bit different: a land value tax taxes the unimproved value of a plot, while a property tax taxes the total value, including the assessed value of the buildings on the land.

One effect of property taxes is that a parking lot downtown pays a fraction of what an apartment building next door pays. With a land value tax, they pay the same, which discourages land speculation by encouraging efficient uses of land.

And we’ve certainly never gone as far as Georgism, which suggests a land value tax as the main or only source of government funding, set to be around what an unimproved lot on the same location would lease for.

lightnsfw ,

That’s what property tax is for.

shanghaibebop ,

Raise the property tax, exemption for owner occupied, then tax the rest.

bouh ,

They’re not expensive enough apparently

polskilumalo ,
@polskilumalo@lemmygrad.ml avatar

The maoist uprising against the landlords was the largest and most comprehensive proletarian revolution in history, and led to almost totally-equal redistribution of land among the peasantry.

Copernican ,

Bring on the tanks.

what_is_a_name ,

In Denmark most apartments have “residence requirement” - if you own a unit and keep it empty the city will fill it with someone waiting for public housing.

Blaze OP ,
@Blaze@discuss.tchncs.de avatar

That’s great? Would you have a link? That could be a post on its own

nomadjoanne ,

I think it should just be illegal to not rent out real estate.

Fox ,

How many days is a homeowner allowed to be away from home? How does a government keep track of this without violating people’s right to privacy?

Trudge , (edited )
@Trudge@lemmygrad.ml avatar

183 days. You self-declare unless the government has a reason to audit. This is a solved problem already and we’ve been going by these standards for decades.

It’s called establishing a domicile in tax terminology.

Honytawk ,

The government knows where you live. It is on your ID.

You can only have one address on your ID. So they know where you don’t live.

Fox ,

It’s not on my ID, though. And even if it were, they’d need a way to monitor actual occupancy over time and there’s no way that wouldn’t be invasive.

It’s common and reasonable to be away from home for months at a time, and you have a right to travel. I can only imagine the burden this would place on someone who’s away for medical treatment or supporting a distant family member. Or just out of the house for renovations or an issue they can’t afford to fix currently.

The administrative burden alone would be huge before you get to unintended consequences.

Torvum ,

“You shouldn’t be allowed to own something and use it for any purpose that you want, just because you bought and own it”

The fuck.

LazyCanadian ,

Can’t drive a car without a license, rules around usage of things you own are pretty standard.

Torvum ,

I can still buy a car and have it just sit there. The driving part is due to affliction of other people’s well being. Me raising the money to buy a house and deciding I want it as a summer stay location, so I leave it sitting there while I’m somewhere else would have no harm on another’s life.

GreyEyedGhost ,

There are also rules for where, when, and how long you can have your car sit somewhere, including your own yard in some places.

Honytawk ,

So lets turn it into the extreme.

Say you are so rich, you buy every house on the planet. Which you will use as your summer/autumn/winter/spring stay locations.

Would that still not harm on another’s life?

MarsMa ,

I believe that you should be able to keep a property empty if you choose, it should just be taxed in a way that’s proportionate to the damage it causes to the community.

Empty properties inflate housing costs -> Increased housing costs reduce the amount of people willing to live in the area -> Which reduces the amount of people able to work for local businesses.

Torvum ,

[Thread, post or comment was deleted by the moderator]

    •
    Pyr_Pressure ,

    Should someone be allowed to buy all the freshwater lakes around a major city and then not sell the water for people to drink?

    Ew0 ,
    @Ew0@lemmy.sdf.org avatar

    Nestle vibes

    Torvum ,

    They could now if they wanted. Most lakes are government or private property. You think they’d want to lose profit margin?

    Not to mention the massive difference again, the wellbeing of other people. Houses are crafted by skilled workers, it’s not a right to their labor, nor a right to the owner’s property who purchased it after it was built. You do however have a naturalized right to survival.

    The point is, property taxes are fine but saying “um you should be forced by the government to use something you own in a specific manner” is nonsensical and authoritarian overreach at minimum.

    Aux ,

    Sounds like a typical Nazi…

    nomadjoanne ,

    Did you know that Hitler also drank water???

    Onfire ,

    Why not? I own a house and I want to keep it to myself. I don’t want to deal with problematic tenants.

    phthalocyanin ,
    @phthalocyanin@lemmy.world avatar

    landlords ought not exist

    exohuman ,
    @exohuman@programming.dev avatar

    They don’t? They do where I live. Property tax is real in Michigan.

    Abraxiel ,

    It’s a little more squishy if you’re a large retailer. mlive.com/…/the-dark-store-theory-has-cost-michig…

    xantoxis ,

    Ahem.

    Landlords should have their rental properties seized and placed under the ownership of the local government. Berlin did it. You want to bring housing prices back into reach of the middle class? Stop letting people hoard houses.

    lemming007 ,

    Yes!! Abolish private property, let the government control it. Seize the means of production while you’re at it.

    Wait, it seems like I’ve read that in history somewhere…

    Incubus ,

    Just add land value tax

    Olgratin_Magmatoe ,

    Georgism is the way

    DessertStorms ,
    @DessertStorms@kbin.social avatar

    So close, and yet so far, why so desperate to cling on to capitalism??

    Olgratin_Magmatoe , (edited )

    Georgism is not a form of capitalism. Georgism is a strategy for government revenue. Regardless of what type of economy you have, unless you have pure anarchy there needs to be a source of income for the government. Georgism is the least bad option, they’re all bad.

    I usually fall somewhere in the range of what people call socialism. I’m certainly not a capitalist.

    sugar_in_your_tea ,

    My main concern is Friedrich Hayek’s concern that valuations wouldn’t be fair. Where there’s an opportunity to game the system, those with means will. But maybe it’s better than our current system.

    I would like to see working examples first, if possible.

    Olgratin_Magmatoe ,

    Where there’s an opportunity to game the system, those with means will.

    Absolutely. It’s one of my few gripes with georgism. And at the end of the day a shitty implementation of georgism is better than our current shit show of billionaires and mega corps paying $0 or next to $0 in taxes. Sometimes they even get paid instead.

    But anyways, I haven’t seen much detail about how to fairly valuate land, but I’ve had some thoughts on it. The number one thing should be that all land is taxed at the same percentage, but each plot is valued differently. I think one of the ways to do this would be to simply calculate how far a given plot is from the nearest city center, and factor in how big the population of that city is.

    It’s something that can be objectively measured, should be roughly correlated with what we could subjectively agree on is valuable, and isn’t something that could be gamed easily.

    I would like to see working examples first, if possible.

    The Netherlands has a land value tax, though it is not the sole income source for their government.

    iamexpat.nl/…/how-does-it-work-taxation-real-esta…

    government.nl/…/how-can-i-check-the-woz-value-is-…

    My understanding is that the government employs people to assign a value to each plot, and from there the use case of the land is considered. Land owners can then appeal the judgement if they like. I know there are some other countries besides the Netherlands that have a LVT system, but the Netherlands is the first that comes to mind. I’d honestly be ok with either of these systems of determining land value, either the one I made up or the Netherland’s. At the end of the day it’s pretty much the only way to tax the rich without them just moving their money elsewhere. You can’t move land after all, and much of their wealth is tied up in land.

    Here is a research paper into the effects that might interest you.

    www.elibrary.imf.org/view/…/article-A001-en.xml

    sugar_in_your_tea ,

    Thanks, I’ll check it out.

    I generally think the Netherlands makes sensible decisions (e.g. routing traffic around Amsterdam instead of through it, investing in rail and cycling infrastructure, not having a tipping culture for restaurants, etc), so it’s expected that they would have a decent solution here too.

    I wish the US would take a page from their book and focus on moving people instead of cars, because pretty much everything else follows from that.

    Olgratin_Magmatoe ,

    I’m right there with you. I feel like I’m talking with aliens when I say stuff like this to other americans.

    sugar_in_your_tea ,

    Yeah, it just makes perfect sense in an urban environment. If they want the “traditional” American car-centric lifestyle, then they can live further from city centers and commute in.

    Olgratin_Magmatoe ,

    I’m lucky enough to live in a place that is a little bit walkable (7 eleven, pizza shop, beer store 2 min walking with a grocer 15 walk), there is so much more that could be done. I wish I didn’t have to get a car, and I am so close to basically ditching mine for an e-bike. The only thing stopping me is that my city’s bike safety is not the best.

    sugar_in_your_tea ,

    Mine is pretty close as well, but I need a better way to get to work to ditch one of my cars (will always keep the other for family trips). My preferred option is extending the light rail system along tracks that already go near my house and are largely unused (only used periodically so stash unused cars/engines). Without that, my commute is ~2 hours by transit, and it would be about half if the line existed. Driving is a little over 30 min by car, for reference.

    I could switch jobs and then cycle to work, and there are a lot of opportunities along a really nice bike path, I would just need to actually switch jobs.

    And I live in the middle of suburbia, I’m sure other people need much less. Yet my area doesn’t prioritize transit, and instead we keep widening highways, which isn’t a long-term solution.

    bluGill ,

    Landlord should always have a few not rented places so that when someone is ready to move there is a place they can go. They also should be doing major remodels and upgrades approximately every 30 years which means a long stretch of not occupied.

    bouh ,

    That’s called hostels or inns etc. Right now if places are empty it only means someone can’t come because it’s not for rent.

    Keeping the place for repair is legitimate, but it’s not what’s done either. It’s be easy to make an exception for repair.

    bluGill ,

    hostels and inns serve a different niche - temporary housing is important, but they don't give nearly as much space. If you want to live someplace for a year or more then you want more space for your stuff (how much is personal)

    Shalakushka ,
    @Shalakushka@kbin.social avatar

    By major remodels and upgrades I assume you mean slapping a coat of white paint to cover the cracks and mold, right?

    bluGill ,

    The coat of paint should be done every 5 years, or when a tenant moves out.

    Major I mean things like replace the HVAC system, rewire to add GFCIs, replace windows with something better. If it doesn't cost $20,000 it isn't major. Most landlords do not do this, but it really should be part of the cost of doing business.

    Copernican ,

    Although I love the gothamiat. I think they should pay taxes. But what does this have to do with personal finance?

    JasSmith ,

    This is just tinkering around the edges. We need land value taxes. This is a guaranteed way to solve these massive housing crises occurring in so many Western nations. LVT ensures expensive land is utilised better. Either by highly productive businesses, or higher density dwellings. Either way, society makes more efficient use of the land, and prices are constrained. It's an excellent way to ensure land banking is disincentivised, and that rentals don't stay vacant. Even Adam Smith was in favour of an LVT. Economists are almost unanimous on its efficacy. The only reason we don't widely deploy them is because it will hurt house prices and voters don't like that.

    uniqueid198x ,

    landlords don’t like it either. At least in NY, the lanlore lobby is incredibly strong.

    Olgratin_Magmatoe ,

    A LVT/georgism system would instantly kill the profit margins of all landlords around the country, so they will do everything in their power to prevent it from happening. All the more reason to do it.

    BRINGit34 ,
    @BRINGit34@lemmygrad.ml avatar

    youtu.be/uT5tQV3aPik?si=LKDI44ZDOvcMPYJp

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