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> tax the land of lot developers so they don’t hold land off the market. This is something I dealt with a few years ago. There were a few acreage lots (5-15 ac
by nnf 2y ago
> tax the land of lot developers so they don’t hold land off the market.
This is something I dealt with a few years ago. There were a few acreage lots (5-15 acres) my partner and I were considering buying and building a house on, and all of them had been in the $200k range a year or two before but had been bought by land speculators (in some cases by the same person). Prices went from ~$200k to ~$750k, which we weren't interested in.
Most of them sold. One of the larger lots was around $350k and is still for sale, now for almost $2 million.
I don't think developers should be forced to sell land just because I want to buy it, but the taxes they pay on their empty lots is extremely low. I checked on a couple of the ~$750k lots, and the taxes were something like $115 per year. At that rate, it costs the developer/speculator basically nothing to hold onto it while prices rise.
If lots like this were taxed at, say, 20x the current rate for lots that are near areas that are being built up and are ready to be bought, then there would be a stronger incentive for the owners to sell to people who are ready to build and start paying property taxes. It seems like such an increase would benefit everyone except the speculators.
- lotsofpulp 2y ago> It seems like such an increase would benefit everyone except the speculators. Correct, a simple power law tax formula on unimproved/vacant land that forever increases the cost to hold onto land near and in the middle of population centers would do wonders.
- kaibee 2y agoReally we just need a Land Value Tax. https://www.investopedia.com/terms/l/land-value-tax.asp https://www.investopedia.com/terms/l/land-value-tax.asp
- theoreticalmal 2y agoThis seems a lot like a tax on unrealized gains. You’re taxing something that might have value in the future, rather than it’s actual value now.
- lotsofpulp 2y agoYes, it’s called property tax, calculated by multiplying a property tax rate times assessed value of the property. Does anywhere not already have that?
- kaibee 2y agoA property tax is typically assessed on the value of land + property, and honestly, we don't do a good job of accurately pricing the land value aspect of it. So if you don't build anything and just own the land, your property tax will be very low.
- lotsofpulp 2y agotheoreticalmal's comment seems to imply that taxes on unrealized gains are not a thing, to which I was replying that property taxes are an example of a tax on unrealized gains. Everyone whose home has gone up in market value knows this because their property tax has surely increased over the years even though they haven't sold their home.
- sroussey 2y agoFarther up they are talking about taxing based on what it could be worth, not what it is worth.
- woah 2y agoLand Value Tax (the Georgeism discussed in the article) just taxes the land on what it is worth, not the buildings on it. So holding land vacant costs more because the speculator is not making any money from it, while they could be making money from a building. A side benefit for homeowners is that improvements increase equity and resale value without raising taxes
- sroussey 2y agoSo SFH should get taxed like a high rise. In CA there was/is a ban on SFH zoning. So at least in that case every homeowner should get taxed like at least a fourplex. Considering your wage didn’t increase that means less money for mortgage, etc., so buyers have less to spend on a house and your property goes down in value.
- sroussey 2y agoSeems like the developer wasn’t the problem.
- adverbly 2y agoYour thinking is exactly correct. Economists have been saying this for over a century. Look up land value taxes. They are what we need right now.