[user5994461]

Pardon me but the solution you claim is already in place, well understood and totally ineffective.

Income is already taxable, including rental income. On top of that there are various taxes for owning/occupying a property. It varies with what state/country you live in.

Generally speaking, a property is a poor investment if you already have the money, they have poor returns and they don't grow in value outside of a few bubbles.

That being said, I agree that the pressure of rent is unbearable and growing for most of the population. The rebalance historically happened with wars. Properties ain't worth much when people die and buildings are bombed.

[AznHisoka]

"Generally speaking, a property is a poor investment if you already have the money, they have poor returns and they don't grow in value outside of a few bubbles."

Real estate is a great investment for the risk averse (probably the best one too). Housing usually grows at the same rate as inflation if not a bit more and people will always need it. It doesnt drop 10% overnight unlike stocks. What other investments did you have in mind that you would recommend over real estate? (in the same risk spectrum)

[user5994461]

>>> It doesnt drop 10% overnight unlike stocks.

You can tell that to the people in Houston who lost their home overnight. Home ownership is not risk free. ;)

I am not familiar with the entirety of the US territory. If you look at properties outside of the major cities, they should be relatively stable, renters have no jobs to sustain ever increasing rent. In the far country side, properties should be deflating because de industrialization.

Agreed that it is great for a diversified portfolio. Especially the primary home, it's self sustaining because you'd have to pay rent anyway. A second home is safe, it can host your child now or yourself after retirement, then it's lower returns.

There are a lot of index funds with various risk profiles. There is no general strategy. It depends on your personal situation, how much there is, where your live, and you family.

Now, that might sound stupid. If you own your home and have some savings, you can basically retire. There aren't much expenses outside of the rent.

[kamaal]

>>You can tell that to the people in Houston who lost their home overnight.

And yet how many Houston like situations have happened overnight? Or over the years?

Real estate is easily one of the best savings vehicles you can have.

[shawnee_]

"Pardon me" but rental income is deductible more than it is taxable; everything to do with owning a property and generating "investment income" from it is incentivized to be deductible; it's a great and super fast way to make lots of money.

I don't know what you do for a living, but I have two graduate degrees in accounting and economics, as well a decade and a half researching and studying this very problem. The solution I outline would work... if the goal is to empower people with "equity" as Sam's article suggests he wants to.

[kelnos]

If we remove deductions on rental income, wouldn't that just cause property owners to charge higher rent? If so, then yes, that would of course generate more tax revenue, but at the expense of the renters.

[njarboe]

Property owners generally charge as much rent as they can. Only in places where it is easy to build new apartments is there floor on rents. In that case the floor is a combination of constructions costs, interest rates, and the rate of return to investors of other opportunities in the area. So in a place where building is hard, the rents would probably not rise, but in a place with lots of land and easy zoning, the rents probably would.

[user5994461]

It can't increase rent. Rent are capped by what tenants can pay, they are specifically set to "as much as the tenants can afford" because everyone needs a roof. Taxing the landlord doesn't give more moneys to the tenant.

However, what could happen is that the rental income after tax is lower and not enough anymore to cover the mortgage or the maintenance costs, then the property has to be sold.

[sokoloff]

When that property is sold, from whom will the displaced tenant now rent? Market rents are set by supply and demand, just like most goods.

More supply of rental property? Rents go down so that landlords aren't stuck with vacancies. More demand for rental property? Rents go up so landlords can maximize their profits.

[user5994461]

From the new landlord who bought the place, supposing they didn't buy to occupy it themselves.

FYI: Selling a property doesn't take it off the market. It's just owned by a new owner, who's gonna either live in or rent it just like before.

[sokoloff]

Of course it would, either directly or via a reduced supply of profitable rental properties (and the resultant shift in supply-demand equilibrium).

There may be an offsetting overall reduction in the value of all real property, but it seems like reducing or eliminating these deductions[0] would be harmful to renters, not helpful.

[0] - Deductions like this, by the way, are available to all sorts of other profit seeking businesses for the equipment and supplies they use in the conduct of their business and I see no reason why a house should be different from a factory machine or laptop computer or airliner nor a minor repair to a house be different from a pad of paper or other consumable with regards to whether ordinary and necessary business expenses ought to be deductible against gross revenue when computing profit.