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Originally Posted by MMM
Thanks for clearing that up Nyororin...that makes more sense. (I read that book a couple years ago, so my memory was a bit foggy, it seems.)
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Actually, you`re probably right about what the book said. That doesn`t mean it`s exactly accurate though. Too many people seem to interpret "lack of tax breaks" as "additional taxes". In the end it looks like the same thing, after all. The motivation is different though. With a used house, the value is low from being "used" (which is linked to the social taboo aspect of it) - if someone is planning to buy a used home, they won`t have to pay all that much to get one.
However, as it is part of the culture to shun used homes and only buy new, even with the (sometime painfully) higher costs, a family will hold out on buying until they can afford a new home. Obviously, this isn`t good for the families, the builders of new homes, and the economy in general (people don`t spend when they`re trying to save up for a down payment.)
So the government offers subsidies to people who are buying a new home. You get so much of the loan taxes back each year, along with other tax breaks. Not offering these breaks on used homes helps to stop speculation - as often when someone buys a used home, they do so for the land - not to actually live there. When the value of the area goes up, they tear down the old house and cash in with a new home. Giving those sort of people and companies tax breaks for buying used just wouldn`t be right.
Even in the case of an individual buying the home to live in, used home prices are low enough that they don`t really *need* a break.