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Monday, October 15, 2012

Buchanan: Owning v. Renting -- Housing Policy, Tax Incentives, and Middle Class Dreams

Neil H. Buchanan (George Washington), Owning Versus Renting: Thoughts on Housing Policy, Tax Incentives and Middle Class Dreams:

This document gathers together 22 essays that were originally published as online commentary by Professor Neil H. Buchanan, between 2008 and 2012. All but one of the essays first appeared on the Dorf on Law blog. In these essays, Professor Buchanan discusses the arguments for and against government support of individual home ownership. Most of the essays focus on how to move away from the model of individual ownership. The latter essays, however, begin to embrace the possibility that home ownership incentives should be expanded, to mitigate the current upside-down quality of those subsidies, and to preserve middle-class professional jobs. These essays were also included in the continuing legal education materials for the “Teaching Tax” session at the 2012 Joint Fall CLE meeting of the ABA Sections of Taxation and RPTE in Boston, on September 14, 2012.

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Comments

One benefit of home ownership that I enjoy is not mentioned in the essays. That is the great tax advantage that a handy person enjoys by improving his own property and realizing the fruits of his labors, upon sale some years later, 100% free of income taxes and payroll taxes and, if he does it right, of capital-gains taxes as well.

I am that handy person who can do anything around the house that needs to be done, from concrete, tile and stone work to plumbing and electrical. I have owned various homes in the past and have gained greatly from the improvements. I now own homes in a ski resort, in Rio de Janeiro and in Austin, TX. I spend time in all of them, mainly building decks, verandas and sheds and remodeling kitchens and bathrooms.

When I do sell, I will have earned hundreds of thousands of dollars that will end up in my account free of all but RE transfer tax. Although I am a computer engineer with a law degree who could earn over $100/hour in contract programming work, I can't afford to work in my learned professions because of high taxes, particularly the stupid payroll taxes and benefit programs, along with punitive income taxes for being single and childfree.

No, give me land, lots of land in Colorado, Texas and Brazil and keep your union dues, certification requirements, benefits and taxes. I'd rather have a boss-less job in the sunshine where I can drink beer and take off any day I want to.

Posted by: Jimbino | Oct 15, 2012 5:28:14 PM