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Oh, how horrible. /s
If it was just a problem of paying more taxes then the argument would be bullshit. The main problem is buried at the end of the article:
This is the real reason they are not moving. They would be stepping backwards financially instead of stepping forward.
Feels like the crux of this whole thing is that housing shouldn't be an investment.
Good luck changing that. Housing has been a promised vehicle for wealth growth to multiple generations.
How could it be changed so it wouldn't be?
Land is mostly a set resource with new developments and cities slowing. Home development follows land and while there's been a boom, overall it's been slowing. As there are more people, demand for housing increases.
All of this drives cost of homes up. So the longer you are in a home, the more it and/or the land it worth. Usually outpacing inflation. So when you sell, it's worth more. It's an investment by default even for those people who own 1 normal-sized single family home. It was an investment even when housing prices were reasonable decades ago.
A-fucking-men.
"The market" sets wages. My ass, the market is Billybob greedy asshat saying "I won't pay more than this." Then Timmyjoe fuckwit says "well the market has spoken, it would be stupid of me to pay more when Billybob is only paying x"
And for you theorists out there "supply of labor will affect wages" let me introduce you to the new excuse: "No OnE wAnTs To WoRk AnYmOrE!" Can't hire at the shit wage that's out there? Just complain no one wants to work!
This comment is essentially commodity fetishism ELI5'd and I love it
https://en.m.wikipedia.org/wiki/Reification_(Marxism)
I watched a video a while back that talks about how in Tokyo housing is seen as more of a consumer good than an investment, and explains why:
https://www.youtube.com/watch?v=d6ATBK3A_BY
Interesting. So there's 2 main reasons and 1 knock-on effect on why Tokyo (not Japan, just Tokyo) has affordable housing.
The first one is achievable nearly everywhere and would be quite popular. Except with those who already own homes. Building high-density housing will lower housing prices for those nearby. The video covers this well.
The second isn't going to work in the US. Homes are the #1 generational wealth is accrued and how people rise in economic standing. From paycheck-dependent to stable, etc. Trying to take that away without some other way to build wealth and especially without a national retirement system is going to be deeply unpopular.
Another aspect I found very interesting: Tokyo demolishes and rebuilds every house on average every 30 years. That's wild to me. They build for safety but not longevity. No one wants a pre-owned house. Couple this with the inheritance tax and I imagine most older people will just sell their homes or pass down only a small amount. Japan's Public Pension System makes this feasible as well and without that I can't see this becoming viable in America.
I also wonder how wasteful that kind of demolition ends up being.
Extremely wasteful - and that's to say nothing of the obvious climate impacts from said waste. It's one hell of a drawback to what I would otherwise describe as a system that works pretty well.
Public housing would be a step in the right direction
We've had that in the US and they're referred to as "the projects."
What's your point?
... What's the issue?
They paid for the next place, including fees, and still have $50k in their pocket? How greedy does someone need to be, exactly, before we consider the behavior repugnant?
The issue is that they sold a large home and bought a small home and had very little money left over. It doesn't make financial political sense to do that. They might as well stay where they are. There is little incentive to downsize.
Part of the solution to the housing crisis is solving that incentive problem.
Aww, poor them. They only had enough left over to pay fully for their next place and pocket $50k.
As long as you ignore property taxes and maintenance costs. Which normal people don't ignore.
The have their new property paid for and also have a much smaller property tax bill and lower maintenance costs. There's still plenty of incentive to downsize.
Paying taxes on profit might hurt a little, but it's a good problem to have.
What? They would have a much bigger property tax bill
I think the issue is that with mortgage prices and the incredible costs of homes in California, capital gains tax comes into play for them when the vast majority of homeowners never even consider it.
So you have people with a large single family home wanting to sell and move into a small single family home (1-2bed) or even a condo and they end up with no benefit from doing so and potentially even an expensive mortgage. Essentially they are selling an Escalade to get a Civic and breaking even, which seems odd.
I think the capital gains tax exception should be expanded to be waived for single family homes under XXXX sq ft, with the above stipulations (living in the home continuously). It's not these people's fault their neighborhood shot up in price outpacing regulations meant to protect normal home owners.
Their only real out in this situation is to move away from where they've lived their whole lives.
Waive tax for primary residence, tax the everliving fuck out of non-primary residences to the point nobody wants to rent them out anymore.
Nope. No exceptions. You made money for doing no work, you pay taxes on that money. Plain and simple. Cap Gains tax rates are already absurdly low, so frankly anybody asking for a further reduced rate or exception is already a greedy pig not worth listening to.
Condos generally aren't much cheaper than houses. They would have the same issue if their region's real estate was half as expensive. They would have had this problem 10, 20, 30 years ago if they were retiring. If you sell a house in an expensive area and want money left over, you either have to choose a shittier house/apartment to live, or a cheaper area.
Their home is worth 2mil. They absolutely would not be stepping backward.
It's a ridiculous scenario considering the real value of their home. They might as well have invented a scenario where these people only get $100k for their 3000sqft, 5 bedroom home and then have to pay $2M for a one bedroom condo on the bad side of town.
That's a fictional scenario, though. Why would an entire house be selling for the same price as a tiny condo with HOA fees? These people have a huge house worth millions of dollars, so I'm confused why they would use a $500k sale price in their hypothetical scenario.
Sure those are made up numbers but they illustrate a real issue. Where i live, and I’m sure other high cost of living areas, it’s the land that’s expensive, in short supply. The actual house might be a much smaller part of that.
What that turns into is prices may be insane, but a house isn’t much more than a condo isn’t much more than a vacant lot. Then when you buy, taxes are reset to the new value, so property taxes will now be much higher and realtors commission will be insane. So they need to take a mortgage and take a cost of living hit on the taxes, then are clobbered by high interest. They may literally not be able to afford to downsize
Haha, I mean I get it... Giving away money to uncle sam sucks but I agree with your sentiment. They are coming out ahead, that house was an investment that is paying dividends. I am hoping to have that problem some day!
Contributing financially to the democratic society in which you spent the entire time of gaining monetary value able to vote which enabled the increase in value of your property? That’s the thing here, this isn’t throwing money away, and it isn’t imposed without your say. Taxes aren’t fun, and we don’t always like where they go, but as adults we should be able to respect them. They’re part of how our society functions and a necessary component of many nice things we need in order to prosper.
This long time anti tax attitude in this country is part of what destroyed our infrastructure, ruined our regulatory bodies, and contributed to our massive wealth gap.
Isn't this where the boomers use a 1031 exchange and convert the large home into a smaller luxury condo for themselves and a few lower income units to rent out to struggling Millenials?
I forgot about all the people howling and foaming at the mouth about the "death tax". Boomers gonna boomer I guess.
Rent it, buy a new house, die, and the tax threshold on estates is $2 million.