Wealth is not income.
You can be wealthy and still have poor cashflow, especially as a leveraged property owner
You can be wealthy and still have poor cashflow, especially as a leveraged property owner
Right, this is the narrative that people who have built a life somewhere should be required to uproot and move to a cheaper place because others want to take over their home.
That's why this idea doesn't get much support.
If we are going say houses are not just investments, they are homes, then we can reduce the property taxes and let the government take the profits/losses in the home's value.
If we are saying houses are investments, then they should be subject to taxes and costs accrued in the upkeep of that investment which includes the infrastructure that property taxes pay for.
You should talk to some (or a lot) of homeowners to see who feels that way. Personally I've never met any who thinks of their home like it was a stock certificate.
To most people, but especially older people, their home is home. Where they built a life, saw kids born and raised and where that now-adult kids bedrooms still brings them memories. They'll talk to you about those memories and how that neighborhood still has some of their lifelong friends and how their trusted doctors are all nearby (this latter might seems like trivia to 20-somethings, but is all-important to 70 or 80 year olds).
Ask them about the zillow zestimate of their home and very few will be able to tell you what the home is worth on the open market, and even fewer care. They're aware it has some value, the kids will inherit it someday and they are happy to pass it on, but it has zero investment value to them personally in their life.
I'm not in that demographic yet, my kid is still a kid living at home, but I'm getting older so I can visualize it is how I will also feel. I also don't know what our home is worth. Last time I looked it up was years ago. I guess I could look it up again but it's not important, it is our home, the value doesn't mean anything. I'm not going to sell it to take profits, I'm going to live in it.
So this is completely opposite of actual invesments, where I check my stock prices many times a day every day.
> If we are saying houses are investments, then they should be subject to taxes
This is interesting because on actual investments, where I might be sitting on 1000+% profits, I pay zero taxes until I sell someday. So you want to declare a home an investment, but tax it in ways no other investment gets taxes?
For owner-occupied, it sounds like someone who made a risky financial decision because of perverse incentives. Which also seems good to revisit.
Also in these cases cash-poor is not low-income. It's likely to be high-income+high-obligations the way you describe it. Hard to get all that leverage otherwise.
Rental yields are so low in the UK compared to the cost of finance, tax and maintenance that being a landlord has become completely unprofitable, which means the rental sector is falling apart.
Pretty much no landlords in the south east of England are cashflow positive on a monthly basis, and if they are they are yielding less than government bonds