They have a million in untaxed gains and a tax bill which goes away if they collect their million. They are in the top 10% wealthiest families. Don’t cry for them having to sell and collect their gains (again with no taxes).
Cry for the family next door paying 20x the tax bill, or the one which can’t afford the neighborhood at all because of the tax differences.
Everybody should pay the same tax for the same property should not be controversial.
I think the edge cases are going to be bad no matter the method of fixing things. Just figure out what level of collateral damage is acceptable for the greater good.
They get a million dollars. I’ll play a tiny violin for them.
There is no magic bullet for the housing shortage. There are simply way more people that want to live in desirable areas than there are dwellings to house them.
Rent control is one of the best ways to ensure higher long term housing costs. Taxing investors will mean fewer houses get built and fewer houses are available for rent, which will hurt marginalized groups and people with poor credit.
Adding ADU’s aggressively in major cities is a good strategy, but we can’t even get that done in Atlanta lol—It’s a major fight with the NIMBYs unified against it.
Changing new zoning to explicitly allow ADUs and give a tax incentive to rent them (not paying property taxes on the value of the improvement if it’s used as someone’s primary residence perhaps) would actually start to be a solution. But two observations are (1) that’s essentially the opposite of the policy being advocated here, and (2) it’s essentially the opposite of what most municipalities are doing, which is basically to assume our society is 100% nuclear family homeowners in their zoning codes.
Ergo, housing shortage.
In a 2015 Slate article, Henry Grabar illustrated this point well, pointing to the case of a parking lot charging drivers $40 per day for parking and accruing under $10,000 in property taxes. That parking lot, Grabar writes, sits next to a seven-story building that requires more than a quarter of a million in taxes annually.
“It turns NIMBYs into YIMBYs,” explained economist Noah Smith, who has written about land taxes. “You leverage the same toxic local politics that are now creating NIMBY-ism, you leverage for YIMBY-ism because now you have people wanting to build stuff.”
This policy would really be a boom for the Au Pair industry
Which is an awful, exploitative industry.
Progressive marginal property tax rates – higher rates as sqft increase. Like we do with income tax.
Higher rates for lower population density. If you’re not a farmer, maybe you don’t need all that acreage to yourself.
Taxing on assessed value minus fixed homestead exemption is basically the same effect, which is already the case for most of the USA.
Taxing additional per SF specifically seems convoluted and backwards. Average new build square footage is declining (down roughly 10% since the peak a few years ago), and the 5,000 SF hulks in the suburbs are not appreciating at the rate of ~2,200 SF houses in prime neighborhoods. Further, they generally cannot be subdivided by zoning or by HOA restriction. So I’m not sure why we would further depress the relative value of cheap mid-00s construction in the suburbs.
Average mortgage rate up to 5.1%. This is going to keep people from selling unless they absolutely have to.
How would you create pressure to allow for subdivision of those lots?
No idea. It’s probably nearly impossible in existing communities. Dropping rental caps in existing condo buildings would likely be the easiest move to add more rentals to the market, but HOAs feel they’re making a compromise by doing this (both by adding “potentially undesirable” renters into the mix, and by adding more rental competition for people with leasing permits). So well to do folks with extra condos for convenience or an investment just sit on them. A property tax rate increase and homestead exemption increase may help, but it’s only gonna be on the margin. They’re paying way more $$$ in HOA dues and don’t care.
My company is actually developing a subdivision right now, so I am taking a foray into residential construction. It’s a whole new world for me.
One quirk of the zoning code is that we’re limited to 1 unit per gross acre, but each unit has an allowable ADU. Obviously we’re trying to maximize this (if nothing else than to create more income diversity than the married white people who typically are the only ones who can afford new build homes) but getting builders on board is tough. They’re the ones investing in the actual construction of the house, and are much less interested in income diversity and building a good community than they are in making sure the house can sell.
So we own the land AND have super favorable entitlements but I still don’t think we’ll be able to get ADUs on many houses in our first phase. It’s frustrating.
Black people have suffered from a lack of generational wealth specifically because of slavery and then racist housing practices which prevented them from owning homes. I’m not familiar with stories of Black homeowners whose homes have appreciated so much that they stay despite crushing property taxes rather than just selling their property.
So I’m doing a new build in California, and it sure seems like the state has some pretty strict regulations on lot sizes (keeping them small) and energy efficiency (every house has to have solar). The biggest lots are 18k sqft, most are 9-11k, even though a lot of these houses are 2300-3100 sq ft footprint.
This suggests you can increase taxes enough to make them care.
If rich people want to live in gated communities on lavish estates away from the masses, I’m willing to let them so long as they pay a hefty fee for the privilege that can be used to subsidize more equitable housing for everyone else.
Our community will have tiny lots (4,500 SF is probably the median, which could carry a 2,200 SF home perhaps). There is a mandatory 70% conservation easement by code. Most of the neighborhood will be preserved forest and publicly accessible parks.
This type of neighborhood is getting astronomically higher PSF sales prices than traditional suburban stuff, which is obviously a big part of why we’re doing it (also that it’s required by code, lol). It’s legitimately a healthier, better way to live, but making it available to a more diverse group of buyers and renters is a challenge. The outright entitlement to build an ADU for each unit is huge; it means we can strive for “affordability” without it costing us anything (ie without it driving up costs for everyone else). But in most existing neighborhoods, even the physical space to build ADUs is really rare, let alone the entitlement. So I don’t see it being a big solution to broader housing problems; just a stopgap really.
In the UK they manage this by requiring developments to have a proportion of ‘affordable’ housing. Forcing builders to build only mixed income neighborhoods can go a ways to alleviating a lot of the problems our suburban planning creates for e.g. school funding and segregation.
THAT’S SOCIALISM
NYC has been giving developers tax incentives to include affordable housing in new builds for a while. I don’t think they build old-style housing projects anymore.