This shows that a lower tax is more profitable. The case where profit is <=$0 exists, but the the speculation also generally increases profit if we're just ignoring the part about it being speculation (with risk of never filling a spot or not having cash flow). A solution might be to lower taxes, but the incentive to speculate is still present (would you rather $84,000 or $204,000?). A better solution would be to punish the speculation directly. A variable tax rate where the unoccupied unit is taxed higher might accomplish this.
I'm being dense; how have you factored that in?
I agree that a higher tax will might not resolve the situation. I also think that a lower tax would not, either. First, some math:
((years_rent * months * rent) - (years_hosting * months * hosting)) - (years_tax * months * tax)
The cost of renting immediately at $1,5000/mo and $1,000/mo tax:
((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $0
The cost of renting immediately at $1,5000/mo and $500/mo tax:
((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $120,000
The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $1,000/mo tax:
((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 1000) = $84,000
The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $5,000/mo tax:
((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 500) = $204,000
This shows that a lower tax is more profitable. The case where profit is <=$0 exists, but the the speculation also generally increases profit if we're just ignoring the part about it being speculation (with risk of never filling a spot or not having cash flow). A solution might be to lower taxes, but the incentive to speculate is still present (would you rather $84,000 or $204,000?). A better solution would be to punish the speculation directly. A variable tax rate where the unoccupied unit is taxed higher might accomplish this.