> Housing is close to a perfectly-competitive market.
Pick any US jurisdiction (with the possible exception of Puerto Rico? I’m not very familiar with how taxation works there) and contemplate the tax implications of selling an appreciated property. Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price. Then say again that it’s perfectly competitive.
Hint: there are all manner of effects here. Capital gains. The basis step up at death. 1031 exchanges and their associated rules. Transfer fees, title fees (which is pretty close to being a tax).
Transfer fees and title fees equally affect any buyer and any seller in the long run, don't they?
>Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price.
Sure -- this is why I was asking for examples. "Rich people having more options than poor people" (which is what I think 1031 exchanges and your nod to capital gains refers to) is true across all domains without exception. It's true that I tend to discount that, acknowledging its unfairness. My point was prices are public(!), and historic sale-prices are public(!). A _particular_ (rich) buyer may have individual reasons for buying a house, but the market is almost perfectly competitive, because prices are public.
> "Rich people having more options than poor people" (which is what I think 1031 exchanges and your nod to capital gains refers to)
Not really. They affect buyers and sellers in ways that are, for the most part, quite arbitrary. In expensive markets, capital gains taxes can hit homeowners harder than landlords, which has all manner of weird effects. (And homeowners are not necessarily poorer.)
Look around any old-ish city with heavily appreciated property values, especially in California, and you’ll see older people in oversized houses who can’t really afford to downsize. This, IMO, seriously corrupts the market and hurts people who want cheaper housing.
Pick any US jurisdiction (with the possible exception of Puerto Rico? I’m not very familiar with how taxation works there) and contemplate the tax implications of selling an appreciated property. Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price. Then say again that it’s perfectly competitive.
Hint: there are all manner of effects here. Capital gains. The basis step up at death. 1031 exchanges and their associated rules. Transfer fees, title fees (which is pretty close to being a tax).
(I’m not the one who downvoted you.)