Which is an incentive to not sell and instead take out a low interest loan using the properties as collateral. Many cities do have a Homestead exemption which reduces the real estate tax for primary residences.
Why should investment properties be taxed worse than say, stocks?
If property is expensive, it means there's a demand for it. The price is a good signal that the area needs more properties built. It's only the gov't (local gov't perhaps, or NIMBYs) that are stopping it from happening.
Raising taxes isn't going to fix the problem. It only forces existing investors who are on the margins to get pushed out.
It is not a fundamental human need to live in a super cute townhome in a hot walkable neighborhood near lots of other people you’d like to socialize with. If you want free housing, it’s out there, just not where you want it.
shelter is a fundamental need, not the desire to own an asset. You do not need to purchase, as renting is much cheaper (esp. at current asset prices).
And while you cannot create more land (tho tell the dutch that!), you can build more dense. And in an area of growing population, this might be a good solution, as demonstrated in many other cities. However, people who would prefer a single family home with a backyard must be prepared to pay a premium for this privilege.
And my proposal of more investment will indeed help alleviate the lack of shelter by incentivizing more to be built! Taking away investment money for it will only mean a different group losing out vs the existing group. Policies shouldn't decide winners and losers - policies should be made win-win.
Only 50% of the gain included for taxation. One could include more (say 75%).
They could also bring in additional property transfer taxes for reach home, taxing people more for each additional property they buy. Singapore does this.