Re:The Shock of Sweden's Housing Market Is Hitting the Count...
by lisper on Wednesday November 15, 2017 @05:24PM
(#15708462)
> saying that "rising prices are as bad for the owners as they are for everyone else" is hard to justify.
You're right. I retract that. (Unfortunately, it's too late for me to go back and edit the original comment.)
Let me rephrase: rising prices are not always an unalloyed good even for home owners.
In your case, you can a) stay where you are or b) sell the house, pay the tax, and buy a similar house (or a cheaper one elsewhere).
An alternative you that didn't buy that house at that time, and got lower after-tax returns on that money, doesn't have option a) and has less capital available for option b).
Everyone else is in an strictly worse position than owners.
You have an unrealized capital gain and an unrealized tax liablity. Selling the house you'll realize both. You "feel" that you are not realizing the capital gain if you buy a similar house with that money. It's understandable, nobody likes paying taxes. But if you were to sell the new house in the future (maybe to downsize) the transaction would be tax free if prices don't change.
And as I said already, if you think prices may go down it's rational that you avoid realizing the capital gain and the tax liability at the current level if the utility gain from moving to a "similar" house is not larger than the expected savings of realizing (maybe) a lower capital gain in the future and paying less taxes.