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Comment by Retric | Hacker News Reader

That would require a much larger change to the tax code as currently interest on business loans are tax deductible. I suspect changing this would be a good idea, but it’s a huge change.

The obvious fix is a nationwide property tax that doesn’t apply to primary residences, but again it’s hard to say what that would do.

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Somehow there need to be less incentives for investors/hedgefunds to buy up homes and more help for people who need housing and are increasingly priced out of the market. Housing affordability is a serious crisis right now and neither political party seems to be recognizing it. The party that makes this a priority and actually addresses the underlying problems could do well, but neither of them are taking it as seriously as it needs to be taken.

> Housing affordability is a serious crisis right now and neither political party seems to be recognizing it.

Why do you say this?

There have been numerous bills introduced at the local, state, and federal levels which specifically aim to address housing affordability. Seriously, just type in "affordable housing bill" into your favorite search engine and look at all the articles coming up from the past six months.

My local city council has affordable housing on the agenda for several of the committee meetings.

None of the local "affordable housing" actions I'm seeing seem like they actually address the problem at the level it needs to be addressed. They give incentives to developers to build a certain number of "affordable" units which must stay "affordable" for X number of years for them to get their tax breaks. In the meantime they build a lot more high-end units and very few mid-level units. Mostly this seems like a gift to the developers. Do we get some more affordable units? Yeah, but it's a drop in the bucket and after some number of years they can go back to market rate. People are on waiting lists for these "affordable" units for years. These units are reserved for people making some percentage of the poverty level income. People in the middle get nothing.

In my area/state they've dropped most of the zoning restrictions for locating apartments and ADUs. So you can add an ADU (a small dwelling that can be rented out), but that takes capital that most residential homeowners don't have. Add to this the fear that by building an ADU your property tax will likely go up very substantially and there aren't a lot of takers.

tl;dr Most affordable housing efforts are currently aimed at people who make poverty level incomes (and that's great). I don't see much locally aimed at providing housing that's affordable to folks in the middle. And as rents rise, more and more folks in the middle are not able to afford housing.

That indicates a lack of understanding of how to solve the problem (or, at the very least, a disagreement with you about how to solve it), not a lack of recognition that there is a problem.

Or it indicates a lack of taking the problem as seriously as it should be taken.

You get affordable housing by building more housing not simply designating a percentage of housing to be affordable.

If anything current affordable housing initiatives just make things worse by discouraging new development. Building 10,000 new apartments is strictly better than building 5,000 apartments even if you designate 30% of them to be affordable. The ideal solution is to designate minimum density, so for every acre of land you must have at least X homes.

Wouldn't the obvious fix be elimination of 1031b exchange, capital gains on all house appreciation, and only allowing 1 active federally backed mortgage at a time (with some consideration for allowing a purchase of a new place & selling the old place).

You want capital gains on land appreciation. We want to encourage investment into new developments.

The land appreciates without development on it. If anything, we want only appreciation from developing. If you don't do something to the property, you shouldn't get a profit from it

I think that’s what they where suggesting, however that’s really expensive and hard to implement. If you simply calculate based on the value of the land then a 200 year old house counts as “new” development etc.

Worse it doesn’t actually help. The incentives are there to develop land it’s only local zoning that prevents it.

They've eliminated this deduction in both the UK and NZ in the past couple years, at least for individual landlords. NZ does allow it for new builds to incentivise construction of new housing.

Big landlords already incorporated in the UK. Small landlords (the majority), who haven't yet, just move in that direction and get screwed with legal and accounting costs, but otherwise nothing changes.

Most limited company buy to let mortgages in the UK are underwritten by a directors personal guarantee. It's just a technicality compared to a personal mortgage and so only shakes out the laziest of landlords

Unfortunately that would just raise the cost of rent.

That said I would support a hard progressive tax on non-primary residence homes. It should really hurt for them to own multiple homes.

It’s a lot more complicated than that with a mix of short and long term effects. It should make home ownership more desirable, but taxes don’t destroy wealth so lowering income taxes for example could largely offset any increases in rent.

Further the value of property would decrease, but the cost of empty properties would increase. That would put downward pressure on rental costs.

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