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Why The Property Panic? Perhaps Dubya's Going To Take His Gift Away

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Why the property panic? Perhaps Dubya's going to take his gift away

HERE’S AN OFFER you can’t refuse. Get on a plane. Fly to Los Angeles. Find a real estate broker (they pretty much greet you on arrival). Convince someone to lend you a million dollars, then use the money to buy a home in, say, the Hollywood Hills. In return, President Bush will write you a cheque for $21,000 (£12,000), every year, until you sell the property.

Tempting, isn’t it? Even in liberal California, it’s enough to make you vote Republican.

Across much of America, this loophole — or rich man’s tax scam, as others prefer to call it — is relatively unknown. It dates back to 1894, when the first federal income tax was created. Back then, less than 1 per cent of the population qualified for federal tax, and most of them were wealthy business owners.

It seemed only fair to allow the likes of John D. Rockefeller and Andrew Carnegie to deduct interest payments — on farm mortgages, tractor loans etc — from their tax returns. But by the time anyone thought to change the loophole, it was too late: 74 million Americans had home loans.

[...]

Will Dubya do it? So far, he has made reassuring noises, but even some homeowners are rooting for a repeal of the tax break, in the hope that it will trigger a market crash.

Blogs such as Curbed Los Angeles (la.curbed.com) have started posting photographs of some of the city’s most overpriced homes (including what looks like a hot-dog stand on a cliff edge, selling for $365,000). The anger is understandable: superheated real estate has not only turned formerly affordable neighbourhoods into celebrity enclaves but has also attracted millions of immigrant labourers, who have in turn made property values in poorer areas rise. Some Californians have decamped to the Arizona or Nevada deserts in disgust.

But even if prices fall, the City of Angels is unlikely to become a bargain any time soon. As Curbed Los Angeles concluded: “Maybe housing prices aren’t rising as quickly as they once were. But you still have to pay a lot to live in a piece of crap here in L.A.”

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But even if prices fall, the City of Angels is unlikely to become a bargain any time soon. As Curbed Los Angeles concluded: “Maybe housing prices aren’t rising as quickly as they once were. But you still have to pay a lot to live in a piece of crap here in L.A.”

It sounds just like London, only with good wheather and a desert on the outskirts.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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