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Comment by lukan | Hacker News Reader

Something like this yes. But the devil will be in the details.

"pay 1% of the buildings value as property tax each year"

A old rotten building might be worth just 10000€. And 100 € a year ain't that much. One would have to tax the property - and who will set up the rates in a fair way in a process that is not vulnerable to corruption?

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And old rotten building sitting anywhere in a city is worth way more than 10.000€. Even if the building is not in good shape, the land is still valuable.

Right, and then the 80yo people living in a centenary house in a gentrified neighborhood suddenly get a 10x tax increase because the next door building got sold to be remodeled as a luxury condo, and drove property values through the roof.

That's good, because if they can't pay, their house is up for remodelling too. /sarcasm

I'm open to being wrong but I believe the data shows, old people in the UK are living in houses that are too large and receiving pensions that rise with inflation whilst "young people" are paying huge rents, can't afford to buy and are stuck with huge student debt. Why shouldn't the old couple move to let 10x apartments be built? Or does the data show differently?

"Why shouldn't the old couple move to let 10x apartments be built?"

Imagine you worked all your life and now you just want to enjoy your peace in your home for your last years. You really would not want to move and I am very against driving old people out of their homes, even though I am one of those young people with a small apartment also seeing empty and unused space everywhere.

I think not what parent comment said?

What do you think parent said?

If the property tax goes up by 10x, then that 80 year old couple has seen a 10x return on their real estate investment. They can easily take out a reverse mortgage to pay the property tax for the rest of their lives.

"They can easily take out a reverse mortgage to pay the property tax for the rest of their lives."

Not everyone can do that easily. I would not know how that works and where are the downsides. I can learn it, sure, but for an 80 year old this would be real stress, having to figure unknown contracts out - and not getting cheated. Old people are a prime target for frauds for a reason.

The reality is that the same thing, in effect, happens if you stop paying property taxes. The tax builds up and then when the house is sold after passing the government collects the tax before the descendants receive the sale proceeds.

This is why complaining about rising property taxes is almost never about the elderly people who actually live in the house. It's about their children that want to inherit the house without paying off their parents' property taxes.

> The reality is that …

People in different countries experience different realities.

Not really. By definition if your property value rises by 10x you have enough money to pay the property taxes by leveraging your home. Sure, it means you'll have to sell when you die and won't be able to pass on the house to your heirs. But the meme, "elderly homeowner becomes homeless because his home became super value" is just a fiction. It's not that the homeowner can't pay the property taxes - he's got plenty of value in his home. It's really the children that want to inherit a valuable home but don't want to cover the tax back payment.

Just in case it was not clear, my comment was about

> The reality is that the same thing, in effect, happens if you stop paying property taxes. The tax builds up, etc.

and in many places worse things will happen to you if you stop paying property taxes.

If the 80yo people are living in the house, then it isn't vacant.

That's not how property taxes work here.

Also, you need to figure out how you define vacant, and how to track it.

If I relocated for work, and use the house 3 months a year and every other month for a weekend, is it vacant? How do you tell?

Yes, we are discussing a hypothetical, from a few parents up: "set a property tax that would hurt if the buildings became vacant"

The definition of vacant is something that would have to be figured out, but it's not impossible. For example, you could do a generous 6-12 months of the year occupation without taxation, and then a sliding scale from there. (So you pay 0% of the new tax at 12 months yearly occupation, 0% at 6 months, 50% at 3 months, and 100% at 0 months.)

It seems to me that we could start with a conservative approach and adjust from there. For example, define a property as vacant if it isn't occupied for 1 continuous month or a total of three months out of the year.

Many property tax systems are based around value of the building, not the land.

I think Japan is one of the outliers where pretty much all property value is locked with the land itself, as buildings depreciate not appreciate.

"Even if the building is not in good shape, the land is still valuable."

That was my point, not binding the value just to the building itself.

That is the very problem we are facing in Turkey :). The municipality determines the value of housing in a neighborhood each year. That is taken as a basis for property taxes and transaction taxes. The municipality assessed value is somewhere near 1/20th of the value of an average flat. So, almost no tax gets collected :(.

That's why this scheme requires land tax, not property tax.

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