Growth of wealth is normal. The price of all income-producing assets (including real estate) will naturally increase, as it is largely influenced by market expectations for future income, adjusted for inflation, risk and taxes. Tax rates will be reduced to 10%, real estate will have more value because it will increase the present value of future income from them after taxation.
Reducing interest rates
Various studies on the effects of the introduction of a flat tax on interest rates indicate that they will decrease by at least 2%, which has two effects:
- At lower interest rates on loans, more consumers will be able to buy a home with a bank loan, so the demand for real estate will increase and their price.
- Lower interest rates on deposits stimulate consumer spending and interest in real estate is likely to increase. Short-term increase in prices of newly built homes. In order to assess the effect on real estate from the introduction of a flat tax, we must keep in mind that it will be applied to the activities of construction companies, i.e. will affect new housing and not existing property.
The Finer Methods for You
In this case, the prices of new homes for a certain period will inevitably increase compared to the old construction (given that the percentage of ownership in the country exceeds 90%, it is normal for the proposal for a flat tax to be profitable from the point of view of current owners). The role played by the income tax calculator is crucial there.
This in turn will direct demand to old construction and their prices will start to rise by now, in which they are equal to those of the new construction. Thus, the market will reach a new equilibrium, but at slightly higher prices. This raises the question of whether this will not lead to a decrease in demand for new housing. To this end, it is important to know what the buyers of such homes are currently. These are mostly people with high incomes who can pay a higher price, corresponding to the high quality of new construction.
With a flat tax, these people will have an even higher disposable income and, accordingly, are unlikely to turn their attention to old construction despite the lower price (but also lower quality in terms of insulation, infrastructure, security, offering comprehensive services on property management).This raises the question of whether this will not lead to a decrease in demand for new housing. To this end, it is important to know what the buyers of such homes are currently. These are mostly people with high incomes who can pay a higher price, corresponding to the high quality of new construction.