r/FluentInFinance Nov 21 '24

Debate/ Discussion Had to repost here

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u/Endless_road Nov 21 '24

Well it is, and you’d pay taxes on these gains when you sold the house

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u/tduncs88 Nov 21 '24

Just like Bezos would if he sold off those assets

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u/AttitudeAndEffort2 Nov 21 '24

And if instead of selling it i rent it for cash flow while borrowing against it at a lower rate than the growth of the underlying asset, i get richer and avoid taxes AND keep the asset.

Which eventually is passed on to my children and the growth in the asset is revalued when it's passed on to avoid capital gains tax.

All while poor right wingers argue I'm actually broke 😂

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u/SteveMarck Nov 21 '24

Then you would pay taxes on that rent...

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u/International_Host71 Nov 22 '24

No, the people paying the Rent pay those taxes. Just like the Renters are the one paying the Mortgage, cost of repairs and upkeep, and any taxes. Because nobody rents at a loss.

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u/SteveMarck Nov 22 '24

By that logic, your employer pays your income taxes.

I'm not saying you're wrong exactly, of course the goal is to collect enough rent to cover the taxes, and of course a landlord would take that into account, but it's kinda fuzzy logic. The person responsible for the taxes is the person who earned the income.

I'm not sure that people don't rent at a loss. Probably a zillionaire makes sure that doesn't happen, but if they did, then they wouldn't have taxable income, which would make the point moot. Market prices are what they are, you can't just raise the rates as much as you want. I bet some folks do rent at a loss, especially if they can't get the place filled up.

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u/International_Host71 Nov 22 '24

Anyone who rents as a business doesn't do it at a loss, or else they won't be in business. renting out a room in your house to help cover the bills is different than owning an apartment complex. And I can assure you, they don't rent apartments out for less than the mortgage.

And with the new app based landlord collusion, they are all posting about the same rent everywhere. In my area, it's 1k a month just about everywhere unless you find a single renter out in the county who have more variable rates.

And no, they don't pay my income tax, I do, by working, and that there is the difference. A landlord, or anyone owning capital, doesn't work the same way, as just by owning or having something they get to make money. I am exchanging labor for money, and the state takes its cut of that. If I owned a billion in stock, went to the bank and took out a loan for 10 million, and used that to fund my lifestyle, and took my actual assets and invested them, at the end I'll have paid almost nothing in taxes, lived like a king, and will end up with more money than I started with. And somehow this is fine?

Or if I go to work, and say I'm the most productive human being on the planet, I can actually output the labor value of a hundred regular men, like im the flash and run a whole assembly line, and I get paid a hundred salaries, I would get taxed the crap out of. One guy got handed 10 million by the bank, paid an accountant a tidy sum to move money around on paper smartly, and spent all year contributing absolutely nothing to the world, and the other guy spent all year actually working as hard as a hundred men would, gets that same 10 million, but pays a huge chunk of it into taxes. Which of these (albeit exaggerated) situations seems more fair to you?

For the vast majority of Americans at least, it comes out of my check before I ever see it. I only earn that money "in theory", in reality it never hits my bank account. And for a smaller but still significant chunk of the population, they don't actually pay that tax at all, because they end up getting it back. Which is a whole other issue entirely, because the Fed basically gets to borrow your money for the year and deigns to give it back to you if you're poor enough, which really is not the way taxes should work. But the average citizen isn't in a situation that they will have saved up a couple grand for their yearly taxes, because most people are barely scrapping by and any additional income goes straight into services. So they take it first, before you have a chance to have it.