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by majormajor 1879 days ago
Yes, if you included real estate at the 250K number, you'd hit a much broader target than you would for stocks. But eliminating real estate entirely is a huge break for rent-seeking large landlords and developers. Probably should've simply chosen a higher dollar threshold for real estate.
2 comments
giantg2 1879 days ago
They probably don't want the tax inflating real estate prices. Those rental owners will just pass the cost on to renters.
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gnopgnip 1878 days ago
The tax applying to real estate would drive down real estate prices, making investing in stocks and other alternatives more profitable.
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giantg2 1878 days ago
That might work if this were a property tax. That would only for prices though, and that annual tax would still be passed in to renters.

The real estate tax they are talking about here applies to the net gain when you sell a property. People price things for what value they want to get out of them (and what the buyer is willing to pay). If you have a 7% tax on profit from a home sale (or appartment building) theybwill be priced higher to make up for it. That cost will be put on the renter in the form of slightly higher rent to cover the owners mortgage or target return.

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gnopgnip 1877 days ago
Whether or not a tax or other cost is passed on to others depends on multiple factors that contribute to price elasticity. For the rental market, for a cost that is incurred on sale and only applies to the most wealthy/active participants this is mostly going to be paid by the seller/owner
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giantg2 1876 days ago
How so?

It's just going to get rolled into the mortgage and passed on in cost of rent. Even if it's not mortgage, the people (companies) rich enough to do that will increase the price to meet their target return.

I don't see the price elasticity being a limiting factor. Your looking at $70 a month more on a $1k rent or $140 on a $2k rent, maybe even less if they plan it keep the property for a long time. People are choosing more on location and quality. Not to mention all properties, given sufficient time, will be subject to the tax and there will be no competition with existing untaxed properties to keep prices low, assuming there's any pressure to keep the price low in the first place.

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vineyardmike 1878 days ago
What “rent seeking large landlord” is paying person taxes from selling expensive properties?

Wouldn’t this have a bigger impact on regular people selling their homes not being caught paying the tax?

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