[cynicalkane]

The economic middle road is to penalize the externality. If a community is concerned about non-resident property owners, they might consider taxing them at a higher rate and longer-term full-time residents at a lower rate. I don't know if there's anywhere that actually does this, however.

[rahimnathwani]

Studies [0][1] suggest that high levels of home ownership increase friction in the labour market, and thereby increase unemployment.

Perhaps we should penalize home ownership?

[0] http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1197...

[1] http://www.iut.nu/Literature/2013/HomeOwnership_Unemployment...

[tonyedgecombe]

Jobs aren't everything.

[gohrt]

Eating isn't everything.

[tonyedgecombe]

Are you saying people are starving because they own their own home?

[nroets]

Buy-to-let is penalized because rental income is taxable. (As a thought experiment just consider the extra income tax liability if two owner-occupiers with identical houses started renting from each other).

This is on top of the fact that CGT applies to non primary residences in the UK and other countries (as rahimnathwani mentioned).

[igonvalue]

In the US, the government already heavily subsidizes home ownership via the mortgage-interest tax deduction[0]. From Wikipedia, it seems that similar programs exist worldwide as well[1]

[0] http://www.npr.org/blogs/money/2012/06/14/154344781/why-does... [1] http://en.wikipedia.org/wiki/Home_mortgage_interest_deductio...

[rahimnathwani]

The UK abolished this in 2000: http://en.wikipedia.org/wiki/Mortgage_interest_relief_at_sou...

[rahimnathwani]

In the UK, there is no capital gains tax (CGT) on the sale of your 'principal private residence', i.e. the place where you live. So, yes, non-resident property owners are already taxed differently.

[wbillingsley]

CGT only applies on the sale of the property. As the property value rises, buy-to-let landlords will often use the equity generated to leverage another loan on another buy-to-let property, rather than sell the first property. So as they keep on collecting properties, they're not paying CGT because they aren't selling.

Especially as CGT is typically lower than income tax, so investors would prefer capital gains over rental profit. (And if their rentals are generating profit, might be tempted to buy more rentals that are not profitable but rising in capital value, so that their rental profit is lower but capital gains are higher).

You hear stories of investors who keep on acquiring and end up with dozens of buy-to-let properties and are leveraged up to the hilt.

Bradford & Bingley, which was the UK's buy-to-let mortgage specialist, was particularly hard hit by the GFC.

[cynicalkane]

If UK taxes work like US taxes, then the community in question doesn't capture this externality (it goes to the state/Feds), so that's small comfort to them.

[rahimnathwani]

Taxing an externality can change behaviour, and the impact is not diminished even if you just burn the cash, rather than redistributing it.

(Unless you're taxing carbon emissions, in which case burning the cash would obviously contribute to the problem.)

[steanne]

"The City of Philadelphia is offering a new tax relief program for homeowners called the Homestead Exemption, which will reduce the taxable assessed value used for calculation of homeowners’ Real Estate Tax bills by $30,000 (exemption amount may be subject to change) starting in Tax Year 2014. A person must simply own their home and live in it as their primary residence."

[gohrt]

It's quite common in USA

http://en.wikipedia.org/wiki/Homestead_exemption