There are a few things that could be done to remove the artificial advantage of (primary) residential property:
- remove the exemption (or reduction) for Capital Gains Tax
- remove Income Tax relief for mortgage interest
- remove any exemption (or reduction) for Inheritance Tax
Not all these advantages exist in all jurisdictions.
Then there are other changes that could mitigate distortions, inequality and volatility:
- separate interest rates for residential mortgages, commercial property, consumption and productive investments (industry, infrastructure, education)
- separate institutions for these different credit markets, with different reserve ratios and other regulations
- promote sound(er) money, to reduce inflation, and reduce the necessity to protect wealth by asset investment
- break cartels of real estate agents and aggregators to reduce transaction costs
- streamline the planning process to enable more houses to be built, without delay and costs of excessive eco/nimby appeals
- level the playing field between landlords and renters (means different things in different local jurisdictions)
Finally, there are more radical combinations of these things, such as removing the claim of mortgage interest as a business cost for landlords, which would raise their corporate taxes and deter high leverage.
>- separate interest rates for residential mortgages, commercial property, consumption and productive investments (industry, infrastructure, education)
How do you propose to do that? If I have money to lend, I'm pretty sure I'll lend it wherever I like the return I get. So interest rates are all related to each other - they should be risk-adjusted equal, because the lenders don't care about anything else.
Separate rates and markets already exist. Commercial property is a totally different market than residential, and agricultural is yet another market. Investment into residential is different than primary residence in origination rules and pricing.
- enforce security and building standards to old buildings, this pushing new ones to be built
Japan has this and it is used to enforce new civil engineering tech for earthquake/tsunami/disaster prevention, but it also makes old not up to standard buildings becomes less valuable
I think our homes are not as technological as they should be because we see them as investments to be preserved
- remove the exemption (or reduction) for Capital Gains Tax
- remove Income Tax relief for mortgage interest
- remove any exemption (or reduction) for Inheritance Tax
Not all these advantages exist in all jurisdictions.
Then there are other changes that could mitigate distortions, inequality and volatility:
- separate interest rates for residential mortgages, commercial property, consumption and productive investments (industry, infrastructure, education)
- separate institutions for these different credit markets, with different reserve ratios and other regulations
- promote sound(er) money, to reduce inflation, and reduce the necessity to protect wealth by asset investment
- break cartels of real estate agents and aggregators to reduce transaction costs
- streamline the planning process to enable more houses to be built, without delay and costs of excessive eco/nimby appeals
- level the playing field between landlords and renters (means different things in different local jurisdictions)
Finally, there are more radical combinations of these things, such as removing the claim of mortgage interest as a business cost for landlords, which would raise their corporate taxes and deter high leverage.