The indirect effect of that is subsidising (richer) homeowners at the expense of (poorer) renters. I really don't think that's a good thing.
The goal of these policies, IMH(umble)O, should be to help poorer renters become richer homeowners.
I feel like you do that by reducing the total cost of walking that path. Not by increasing their tax obligation every step up the socio-economic ladder they climb on their way out of the lower class.
Renters are not building equity. They are spending their wealth every month and accumulating no equity in return.
I don't agree with calling a "homeowner" rich. Owning the ground beneath your feet is a big part of having equity. With a mortgage, unlike rent, every month an increasing amount of your wealth accumulates as equity as you pay off your principal. Once you pay off your mortgage, you've significantly reduced your monthly burn rate and can start moving your accumulating equity into retirement accounts.
Reducing the total cost of primary home ownership, reducing the cost of financing a primary residence to help build equity, etc. are all important parts of giving upward class mobility.
These are not things you want to disincentivize. You want your renters to become owners. You want your workers to become small business owners. You want your communities to build equity in themselves.
If you tell me that being a homeowner today makes you rich, I'll tell you that is part of the problem.
Taxes would still happen on renter investment property.
Just not someones personal home.
So no subsiding at all.
1000sqft or 10,000sqft, small rural home or prime real estate, both zero tax. There's no incentive to improve land use.
Or just make the law have size limitations to be eligible for the exemption.
Easily addressed issue. Not even worth duscussing.
Exactly. It makes renter investment property more expensive to maintain, hence making rental properties a less desirable asset, reducing the numbers built and increasing the cost of renting.
Whereas a homeowner doesn't pay that tax at all, meaning the entire residential property burden is put onto renter.
On the flip side it would increase the number of single family homes and make them cheaper so people could afford them and stop renting.
Sounds like a huge win for single familys and huge hit to giant private equity funds buying up homes and land to turn the middle class into an eternal population of renting serfs.
It would also keep communities intact as people would never be priced out of their own home.
Net win for everyone but the private equity landlords and bloated government.
I've been a victim to people thinking like that - which is why I'm currently paying £1600/month for a 500sqft 1-bed flat, shared with my girlfriend.
But also as more people transition to single family homes renter demand will decrease as well.
It equals out except instead of private equity firm owning all the houses, normal people will.