> You made money before taking the loan, as your property increased in value. Taking a loan is a way of realizing the profit, but you can of course also sell your real estate.

That's incorrect on both counts. You did not make money and the loan is not a way to realize the profit since you have to pay it back, as explained before.

I think this illustrates that finance and accounting are very poorly understood topic and are easily used for sensationalism.

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carlosjobim 6 days ago | parent [-]

There's nothing sensational about it, and I'm disappointed that you cannot see this thing for what it is. Ask people among your relatives who own real estate and you will realize that a lot of them mortgaged their real estate to pay for new cars, vacations, investment in a business, kid's education.

The money is paid back over a long period of time, while the currency depreciates in value and the real estate appreciates in value. The amount of people who have made a fortune through real estate appreciation probably outnumber by a factor of 10 to 1 the amount of people who made a fortune by business or a working career.

If I purchase shares in a company and then sit and do nothing, and the valuation increases by 10 times, then have I made money or not? I can sell the shares or I can mortgage the shares by borrowing against their value. Should that value increase be taxed?

If I purchase real estate and then sit and do nothing, and the valuation increases by 10 times, then have I made money or not? I can sell the real estate or I can mortgage it and borrow against its value. Should that value increase be taxed?

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mytailorisrich 6 days ago | parent [-]

> I can sell the real estate or I can mortgage it and borrow against its value

You make money if you sell. You don't if you use the asset as security for a loan.

This has been explained several times.

A loan is a loan, whether it is a secured loan or not. A mortgage is a secured loan whose security is real property.

You are effectively claiming that getting a loan is making money. Obviously you do not see that this is clearly not the case when thinking about it through a mortgage, but would you make the same claim with credit cards or a personal loan to buy a car, or a secured loan against, say, your car? My guess is that you wouldn't although it is the same thing as getting a mortgage.

	▲	carlosjobim 5 days ago \| parent [-]
		Instead of repeating myself, let me hear your side of the argument. If my property increased 9 times in value and I can: A) Sell it and get that money right now, or B) Mortgage it and get all or part of that money right now, then pay it back in the future. By what kind of logic have you not made money from the value increase? > You are effectively claiming that getting a loan is making money. No, I said that you made the money when the value increased. Your ability to take a loan against it is the evidence that the value in fact increased. I never said anything else.