Comment by derangedHorse
3 days ago
Landlords have to allocate capital to fixing and improving the house, as well as taking care of insurance and taxes. Also, assuming that they're not living in the house and the value of the home goes up, they're taxes will rise whenever an appraiser reassesses their home value.
All improvements are excluded from a land value tax, which actually means improvements are even more incentivized.
Yes that is correct if you occupy land while your community makes it more and more valuable, you should not get wealthier and wealthier for no reason. All of that should be taxed away.
So when you build a sewage farm on your back 40 you should get wealthier (while your neighbors thank you because their land tax went down), but if someone snaps a photo of your area that goes viral on {THE PLATFORM DU JOUR} thus making your county more popular and driving up a bidding war for postage stamp sized lots of land (leading to the land being valued at a higher rate than it was a year before) you suddenly have a massive tax bill because "we noticed you are living in a popular county" and the benefits of living in a popular place should be taxed away? Or do we need some kind of a standard for "more valuable" that deals only with tangible things? And if so, which tangibles?
No, we don’t need standards for “tangibles.” The price factors in all relevant variables.
> All improvements are excluded from a land value tax, which actually means improvements are even more incentivized.
I'm not sure what this applies to with regards to my original comment. Improvements, insurance, and taxes are capital expenditures which need to be managed. This was to counter that landlording "is simply owning an asset."
> Yes that is correct if you occupy land while your community makes it more and more valuable, you should not get wealthier and wealthier for no reason. All of that should be taxed away.
Why assume that the landlord isn't getting the brunt of the cost for making the community more valuable? I don't think there's a strong case for saying a property manager is a job while denying landlording being one. Assuming landlording is completely passive is as far-fetched as thinking that property management is completely passive (both may require irregularly tasks to be performed or require no involvement in the ideal case).
While we don't want to tax a landowber's capital investment and improvements, most of the land value is due to the agglomeration effect of the surrounding land. So land value is mostly not an individual owner's own work, but the sum total of the community's efforts and entrepenural spirits.
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> Landlords have to allocate capital to fixing and improving the house, as well as taking care of insurance and taxes.
These costs aren’t that high though, compared to rent. 3 months of rent covers a year of property taxes where I live. Major repairs are about a couple months rent. There is still another half year of rent that’s pure profit. Then they raise your rent every year, demonize rent increase caps, and then vote for reduced housing builds. I find it very difficult to accept them. If I had the money and the capital I absolutely would own a dozen homes and rent it all out, you would make insane money. Not to mention the mortgage costs being so low during ZIRP days. At the rate of AI coming for SWE jobs, landlords seem untouchable.
> 3 months of rent covers a year of property taxes where I live. Major repairs are about a couple months rent. There is still another half year of rent that’s pure profit.
You missed insurance and mortgage.
Fair. Mortgage during the ZIRP days and prior was really low though. A 3K mortgage then is like a 6-7K mortgage now. And home insurance is also relatively low, I pay like 1.5K for the whole year. Point is, it’s a great way to make money and that is why people become landlords.
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You're assuming a mortgage.