Right, but they would add the cost to the price of the house when they sell. The corp bought the house for say $500k + $50k tax, so they would sell it for more than $550k, so even if you don’t have to pay a tax as an individual, they would just add the cost of it to the base cost of the house.
Sell? Ha! They buy houses then rent them out for significantly more than they pay in mortgage (or than what the mortgage cost would be if they didn’t buy in cash). There’s no financial incentive for them to sell houses for a one-time payment when they’ll just be a lot of free money indefinitely.
If the loan costs less than what they could make on some other investment. They’ll have mortgages.
But if the loan with a dozen or more homes all together as collateral gives a better rate then they’ll pay cash and do that while using the income to pay that loan back.
They leverage tons of different equity to have higher working capital. More money means more profits.
Possibly, but I think the idea is to get them to sell it to an individual right away rather than sit on a vacant property and eat the tax bill in the hope that they can pass on the costs to other prospective buyers in the future. If them raising the cost pushes people out of their affordability range, they’d lose money in the long term and depress the housing market overall if they refuse to play ball, potentially causing the bubble we’re in to pop leaving them stuck holding the bag.
the tax doesn’t apply to individuals buying a house to live in.
Right, but they would add the cost to the price of the house when they sell. The corp bought the house for say $500k + $50k tax, so they would sell it for more than $550k, so even if you don’t have to pay a tax as an individual, they would just add the cost of it to the base cost of the house.
Sell? Ha! They buy houses then rent them out for significantly more than they pay in mortgage (or than what the mortgage cost would be if they didn’t buy in cash). There’s no financial incentive for them to sell houses for a one-time payment when they’ll just be a lot of free money indefinitely.
If the loan costs less than what they could make on some other investment. They’ll have mortgages.
But if the loan with a dozen or more homes all together as collateral gives a better rate then they’ll pay cash and do that while using the income to pay that loan back.
They leverage tons of different equity to have higher working capital. More money means more profits.
Possibly, but I think the idea is to get them to sell it to an individual right away rather than sit on a vacant property and eat the tax bill in the hope that they can pass on the costs to other prospective buyers in the future. If them raising the cost pushes people out of their affordability range, they’d lose money in the long term and depress the housing market overall if they refuse to play ball, potentially causing the bubble we’re in to pop leaving them stuck holding the bag.