America needs to change the United States Tax Code to eliminate incentives and subsidies for investors who purchase and hold single family homes in the United States.

My main point:

Do not give investors a better deal under the tax code than taxpayers who want to own and live in their own single family homes. Better yet, do not give investors any tax deductions for single family home investments. We do not need to encourage speculative investment in the single family housing market through tax breaks.

The Tax Code has had a very large part in the current housing bubble. This fact has not received much coverage in the popular media. I believe that our federal leadership must take aggressive action to correct this situation. Why should wealthy investors be encouraged to use single family homes as rental investments, with tax breaks that are subsidized by Taxpayers who want to buy a house but can’t afford it?

Current situation:
Investors are presently encouraged through the United States Tax Code to purchase single family homes. Investors are willing to pay more than a homeowner that lives in his own house. This makes economic sense under the present United States Tax Code.
This drives up the price of single family houses for obvious reasons – due to federal tax subsidies, an investor pays less each month for a single family house than a Taxpayer who occupies his or her own house due to tax deductions.

Why will investors pay more than a Taxpayer who occupies his or her own single family house? Because investors can deduct expenses related to owing a home that they rent out as “rental property”. Thus, through the United States Tax Code, investors in single family houses are subsidized by all other Taxpayers, including renters. How ironic that in the United States of America, the low income Taxpayer who rents a house subsidizes the wealthy investor who owns the very house that the low income Taxpayer would like to own. This doesn’t seem like a fair way to run our great country.

Investors can deduct virtually all expenses related to purchasing, maintaining and renting a single family house.

Does America want to end up with all single family homes owned by a group of wealthy investors who are subsidized by low income Taxpayers? How about foreign governments purchasing single family houses in America as investments? Here in the Sacramento area there is news coverage of Chinese government officials touring new housing developments, with the implication that a foreign government might end up renting single family homes in America to American Taxpayers. Further, these foreign governments would be receiving tax subsidies from American Taxpayers under the present United States Tax Code. Can this be fair? Is that what Americans want?

My proposal:
Drive investors out of the single family home market.

Change the United States Tax Code as follows. For single family homes purchased in future periods, no deductions should be permitted for investors. This means, no depreciation expense deductions, no repair expense deductions, no deduction for business expenses such as insurance, utilities, etc.
This would put investors on an even footing with American families that want to own and occupy their own single family homes.

Further proposals: There should be no tax deductions given to investors in single family homes for any expenses. This means no deductions for interest expense and real estate taxes. Any gain from the sale of a single family home by an investor should be treated as ordinary income, subject to social security tax. Any loss on the sale of a single family home by an investor should be non-deductible.

Advantages: Investors would no longer bid up the price of single family homes to speculative levels. Millions of American Taxpayers who have been bid out of the single family home housing market by speculative investors would be able to live the American dream – owing their own home. Single family home neighborhoods would no longer be filled with transient renters who have no financial stake in the quality of life in their area. This would serve to stabilize our neighborhoods and protect American families.

Other: Investors should still be able to receive favorable tax benefits for investments in apartment complexes and multiple family dwellings. Investors could still receive tax breaks for investments in stocks, bonds, and any other commodity except single family houses.

To emphasize my main point, investors should not receive a single dime of Taxpayer subsidy to own single family houses as rental property.

I realize that this might not be a popular political position, but America needs someone to do the right thing. In the long run, all Americans will benefit from getting investors out of the single family home market. If more Americans own their own homes, everybody wins.

The present American housing crisis might have been prevented, or at least minimized, if speculators had not been encouraged by the United States Tax Code to buy and rent out single family homes.

Single family homes are the backbone of America. Get investors out of the single family home market.