this post was submitted on 28 Jun 2023
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Lenders now seeing 60-, 70-, even 90-year mortgages as Canadians struggle with rocketing interest rates (www.thestar.com)
submitted 2 years ago by [email protected] to c/[email protected]
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[–] [email protected] 7 points 2 years ago (2 children)

If no one rents a home, the owner must either: leave the home empty, or lower the rent. Either way, if the home loses money, a rational investor has to sell.

Doesn't the investor get to list the loss as a tax write-off?

The investor can always wait. There's a housing crisis, so people need somewhere to live.

Wouldn't building more homes be a better long term solution?

We need to do both. Addressing the issue from the supply side and demand side makes sense.

[–] [email protected] 2 points 2 years ago (1 children)

Write-offs are only applicable if some other part of the business is making money

If the entire business is owning a few properties and they are all in the red, there's nothing to write off against

[–] [email protected] 2 points 2 years ago

For small-scale landlords the loss would count against their regular income. For professional landlords, they probably have other properties.

[–] [email protected] 0 points 2 years ago (1 children)

Doesn't the investor get to list the loss as a tax write-off?

I'm not 100% certain on the details, but yes. A landlord can reduce their taxes on other income but that doesn't mean they aren't still losing money.

The investor can always wait.

That's only true if the expected increase in value covers the cost in carrying the property. If property values don't increase dramatically over time, waiting just loses money.

There's a housing crisis, so people need somewhere to live.

Exactly what I'm saying. Demand is, for the most part, inelastic. Each person requires some amount of space. Owning multiple properties that are occupied satisfies housing demand as much as each person owning their own home. As far as I figure, only vacant homes artificially inflate home prices/rent.

I don't mean to say that people should be stuck renting forever. Everyone should have the opportunity to own their home.

[–] [email protected] 3 points 2 years ago (1 children)

Owning multiple properties that are occupied satisfies housing demand as much as each person owning their own home. As far as I figure, only vacant homes artificially inflate home prices/rent.

As we said above, the renter has to cover the costs of the property, plus the landlord's profit.

[–] [email protected] 1 points 2 years ago

That's just not how rent works. Tenants don't care what the landlord's expenses are. If a home is priced above what people are willing to pay, it'll sit empty.