[TimPC]

Collateral for a loan is a completely separate point. The issue was taxing unrealized capital gains. Effectively if your house goes up $100,000 you'd owe the government the capital gains tax on $100,000 immediately, not when you sold. If you don't have the money to pay for the capital gains you're looking at selling the asset. Finding the money to pay capital gains while paying down a mortgage isn't a direction I'd want to go in.

[klyrs]

As I understand the proposal, you wouldn't owe the tax on $100k immediately -- that would only happen when you use the house as collateral for a reverse mortgage or similar. This makes sense to me, because the capital gains are effectively realized when used as leverage.

[TimPC]

Parent was arguing to not delay capital gains at all, as was the article. I'm pointing out how that idea is bad.

[somedudetbh]

Of course, in the USA, outside of California, this is essentially what we do.

We can argue about whether or not it's good, but its not unthinkable. Property taxes in most places (in the USA, the subject of the article) are linked to the current market value of real estate. Sometimes property values rise, taxes follow, and people have to move.

[TimPC]

Property taxes are such a small portion of property value that they seldom force a move. Capital gains can be anywhere from 20-50% depending on country. Having your home go from 800,000 to 1,000,000 and having your property taxes go from 4000 to 5000 a year is very different from having your home go up 200,000 and suddenly owing the government 40,000 to 100,000 dollars.