Classic loophole. We tell ourselves this is to protect the little people who own homes, but the actual little people don’t have homes at all and rent. Meanwhile, anyone with money will get the picture invest all of it in real estate, once again enriching homeowner as well impoverishing the rest of us.
I totally get that it’s an understandable political strategy. I just think it’s in defensible as anything but a political strategy, and that it will ultimately make life worse for more people versus simply treating assets as assets, including homes. If homeowners do not wish their homes to be treated as assets, then they could simply forgo the right to profits, but I suspect they will not do that.
While I don’t disagree, I think it’s worth noting that the Netherlands has a pretty good level of social housing. Not perfect, but I think it’s 26% based on the stats link in the parent.
Also rent controls. Although these also tend to reward people who have been in the system longer (which _might_ be by design, but that’s just like my opinion)
Social housing and rent controls are not a substitute for basic tax fairness. Of course, as a political tactic, it’s a great way to distract from tilting the entire tax system toward those who already have the most rather than trying to at least try to achieve some sort of a level playing field.
In a way I agree with you that this will cause market distortion in the form of greater demand for real estate over eg. equities. But there are plenty of such tax distortions; for example many countries have favourable tax treatment for domestic dividends.
Regardless, I assume the logic behind this exception is that while you can easily sell a portion of your holdings of publicly traded stocks to cover your annual tax burden, you can't sell a portion of a house. You could of course finance, but that's going to disproportionately benefit lenders.
