Cohousing-L Mailing List: Housing and Capitalism

[William New (wnew]

> On Oct 19, 2015, at 3:16 AM, Elizabeth Magill <pastorlizm [at] gmail.com> 
> wrote:
> 
> I have no great affinity for capitalism.
> But I can't see a way to get home sale prices out of capitalism in the 
> foreseeable future.

The first step would be to avoid a _sale_ that triggers capital gains taxes (or 
tax deductible losses if there are enough offsetting gains).  Sales also 
trigger reassessment for property tax purposes (generally resulting in higher 
taxes as a ongoing cost of ownership thereafter).  This is particularly true in 
California where pre-1978 properties carry a very low tax basis as long as no 
actual sale takes place (corporations rarely buy/sell properties for this 
reason, but prefer to lease from an owner or merge with/acquire an owner).

One model therefore we are seeing more of in California begins with an older 
owner (individual/couple) in a larger property (generally an empty nest after 
offspring have left) who wishes to “age in place”.  By sharing the property 
with younger families (who may live in “tiny” houses around the original family 
“commons” house), the (retired) oldster(s) can continue to live on site and the 
(employed) youngsters can contribute cash to cover expenses and overhead 
(insurance, maintenance, property taxes).  These properties are often placed in 
a trust (or B corporation) that survive the original owner, where the 
trustees/beneficiaries of the trust (or shareholders of the B corp) are 
ultimately the residents of the property.


> And anyone shunning personal ownership of a home, and yet living in one, 
> means that someone else owns the home and is making money simply by "letting" 
> you use their capital investment and taking your money.

In the model above, it is true some individual (or trust) “owns” the 
home/property, but in exchange for sharing the residence the expenses are 
covered.  There is no net profit realized (and thus no taxable rental income), 
only a cost recovery — conceptually a “barter” situation.

Classic textbook example: if I do your laundry, and you do my sewing with no 
money changing hands, there is no taxable event.  If I pay you a dollar to do 
my sewing, and you pay me a dollar to do your laundry, everything is exactly 
the same _except_ a taxable monetary exchange has occurred.  The tax may be 
zero if there is no net profit realized, but one has shifted to a “capitalist” 
model from a “sharing” model.
 
> How is that outside of capitalism?

Many would argue that “sharing” economies lie outside (or at least alongside) 
“capitalist” economies.  You paying for the actual cost of gas/expenses/when I 
drive us in my car on a trip is sharing. Every sharing economic model can be 
easily modified to become a money-involved capitalist model (viz, laundry 
example above, or Uber/AirBnb, even Linux and other open-source software), and 
it is that money serving as an intermediary which is the foundation of 
capitalism (and parenthetically all the abuses of capitalism). It is difficult 
to abuse barter and sharing. 

If the objective is simply for both of us to have clean well-mended clothing to 
wear, or a warm secure roof over our head, it is not clear that capitalism pe 
se needs to be invoked. My 18th Century farming forefathers had very little use 
for cash in the sharing economy of rural English villages, as they described in 
old family letters.

=== Bill

William New
StillCreek Commons
94062-0951