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Yeah it would work as you say, but that’s kind of the point, as it forces an even higher amount of development to justify the tax burden, thus pushing such valuable property to ever higher heights. Again whether or not this is crippling is a matter of the tax rate rather than the tax system I think
Wouldn’t the LVT discourage development in area with expected high land appreciation? Building too early in a neighborhood means your capex gets zeroed by rising land values
Ordinary property tax that we already have would be even worse in that case, because the developer would be paying higher tax from the land appreciation plus the tax from their improvements. LVT just removed the improvement tax.
No it wouldn’t. Ordinary property taxes do total value. A LVT does land (presumably at a high rate).
In this case a property tax would do the tax at market value as built. Existing Capex can get hurt bad in a lvt.
This isn’t making any sense to me. My understanding is that normal property tax taxes market value (or at least an assessed opinion of market value) as built, which necessarily includes the value of the land plus the value of the improvements. LVT taxes just market value (or assessed opinion thereof) of the land excluding improvements. LVT could be set at such a higher rate that it eclipses the differences between the two but that’s just a question of rates, not an actual LVT vs. property value tax question. It’s just not possible that appreciation of land value would result in a greater tax increase than appreciation of land value PLUS the tax on the improvements directly.
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