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I'd like to know what other professionals are thinking the new Capitol Gaines Exemption plan might do to their businesses.
For those who don't yet know what I'm taking about, the current tax laws allow people to sell their homes tax free, as long as they've lived their for 2 of the past 5 years (up to 250k single-500k married). The new bill will change that to 5 of the last 8 years.
This may completely screw many or all of people who have recently listed, or were planning to list in the months to come, as what ever gains their property has realized can now be taxed if they haven't owned it for at least 5 years, IF this bill gets passed.
Personally I may be completely screwed on my current home, as I've lived their for about 3.5 years, planning to list in the spring, and have thrown most of the labor and material receipts in the trash, adding up to what would've been 50-60k in deductions.
Chances are looking like this will have a devastating impact on the market too. Perhaps not in the way of home prices, as much as regarding the volume of home sales.
I expect fewer investors to have fewer investment dollars, and more properties will be going to the corporate world via foreclosures.
What do some of you think?
Last edited by riggy_house; 11-24-2017 at 05:41 PM..
Just what I might have expected; more cricket farts- not only from Senators, but from Realtors too.
If I'd had brought up a football stat, I'd probably have gotten feedback by now.
Well, I could say you might just want to get used to cricket farts, 'cause you may be hearing a lot more of them in the future, instead of cell phone rings from thousands and thousands of investors like me who will no longer be able to flip, due to this tax bill. We'll simply be forced to earn with our money in other manners.
Yeah you could also say that if I just made better decisions with my money, I'd still be able to flip houses, but good luck getting many of your clients to believe that line more than once.
It's game over, bye-bye time for many of your soon to be former associates who can no longer contribute to your industry, and who will be keeping their buns put for very long periods of time.
I hope some of you might at least miss me a little, after all the chaos this new Plan has created in my own personal life
I've been spending time with family since Wednesday.
I think you leave the hyperbole at home.
If the average homeowner stays in their home for 8 years already now (and it was 5 and change before), then is there a significant REAL effect across the board, as you've individually intimated in your equal topics?
You work through the math, and report back.
Don't get me wrong - I've owned 4 houses. The first 3 I owned for: < 2 years; 5 years; 3 years; now 11 years. So I have previously benefited from the exemption.
The National Aasociation of Realtors is on it. We have all emailed our congressmen and senators.
I was considering selling my house in 2018 as well so in the same boat as you. Where you have me confused is if the exclusion is for a principal residence then what is all the hoopla about flipping?
I try not to get all worked up over speculation about a bill that hasn't passed.
I continue to be surprised that no Realtors have chimed in on this and what it could do to their local markets.
I suspect as Slytrix has implied that many Realtors will be frantically writing letters to their Senators behind the scenes, as the ones who take the time to review the situation will quickly understand how badly this will hurt their industry.
So, for one, many who are writing those letters of plea simply probably don't have time for much chit chat on this forum at the moment. I don't blame them for that either.
For two, I get the feeling that many agents are in fear of speaking out against the Repub plans, in a public format where their bosses can see and hear them.
This is no doubt an embarrassing situation that they are quietly worried about, and many simply will not be dealing with this in the public eye.
If the bill passes, yes many of them will be in deeper trouble than they probably now realize, as will our entire nation, but I guess sometimes you just have to sit back quietly and go along with the changes you voted for, whether those changes are for better or worse.
The Irony being that the few who are vocally supporting this bill, or who are appearing to act unperturbed by its potential ramifications, are likely secretly hoping that hard working individuals like you and I will continue to write our senators on their behalf, and in all reality would probably like nothing better than for our senators to oppose this bill, or at least the sec. 1402 article.
The National Aasociation of Realtors is on it. We have all emailed our congressmen and senators.
I was considering selling my house in 2018 as well so in the same boat as you. Where you have me confused is if the exclusion is for a principal residence then what is all the hoopla about flipping?
I try not to get all worked up over speculation about a bill that hasn't passed.
I just mean buying/fixing/and selling a house over the course of a few years.
I know the popular definition for flipping is probably well under two years turn around, and likely without taking up residence, but there really is no legal definition that I know of, so sometimes it's just easier to say "flipping", rather than buying/moving into/improving/selling over the course of two or more years.
I just mean buying/fixing/and selling a house over the course of a few years.
I know the popular definition for flipping is probably well under two years turn around, and likely without taking up residence, but there really is no legal definition that I know of, so sometimes it's just easier to say "flipping", rather than buying/moving into/improving/selling over the course of two or more years.
What would you prefer I say if it bothers you?
Flipping implies both an ownership period well under two years & volume. In my state, getting a real-estate license takes about 100 hours of class time initially & 12 hours a year of continuing Ed, which is a hurdle initially, but with a median home price in my area of ~$200k, snagging just one side of a single commission = most of $6,000 gross savings, not to mention much greater control of the listing & a better chance of a fast sale. So, lots of flippers & slow-motion rehabbers & even landlords get & maintain a license - probably a full 1/3 or even higher of the "active" agents in our system are working primarily for themselves already.
So, realistically, "twue agents" (one who hold a license for the purpose of earning a full living for themselves), aren't greatly affected by the actions of "twue flippers".. If flipping is your business, you either have a cut-rate deal with a broker, or your own license.
Many new agents like to bloviate on and on about part-time agents, but that's mostly because they aren't very good at math - all of the various mls's & trade groups extract lots of dollars from part-time agents, so having extra "members" that pay for mls access & join trade groups to get that access (without using much of the service) are feeding the machine from a larger pool of victims. Eliminating all of the part-time agents would spread the costs over a much smaller pool & raise the monthly nut for "twue agents" even higher, increasing the failure rate of new agents from abysmal to stratospheric.
Tldr: flippers aren't a big portion of most agent's business. If you're buying or selling for investment purposes, you're probably already either getting a deal from a brokerage or an agent yourself.
As for this tax plan, I suspect most of the dollars generated are not from flippers or slow-motion rehabbers (they'll adapt & either rent or live in the properties longer to avoid the taxes), the revenue will come from the unaware & the unwary..
People who *thought* they weren't in a "business", but get taxed like they are running a business. If you own a property for personal use for over 2 years, you're most likely paying for materials and repairs that can't be documented (written off) properly. You may show a profit for tax purposes that isn't really a profit, but lost receipts or physical labor at $0 wages.
Even though I've benefitted handsomely from capital gains, the idea that funds earned simply by having money should be taxed at a *lower* rate than funds earned by the sweat of your brow is frankly bullsheet. Capital gains need to be taxed at a much higher rate that wages for real physical labor, otherwise, you're using tax policies to subsidize those who do nothing & penalize those who actually make your toilets flush.
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really. 
Grammar Nazi Alert
