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I know professional real estate investors are able to write off a lost on a home after selling (after recapturing depreciation costs....although its debatable if these investors actually recapture their depreciation costs). But the law as it stands right now, does not allow regular folks to to write off losses on a home when selling.
But why hasn't anyone in the government propose letting some homeowners sell their homes at a lost and letting them claim it as a tax deduction?
Say you lost 200K in your home after selling, you would be able to deduct those losses so you tax savings would be around 60-70K. At least this mitigates some expenses for the government having to bail out some homeowners. The homeowners would be the ones taking the real hit financially. The mortgage holders would be protected. The taxpayers would be protected. The homeowner selling would gain a little tax advantage (but still losing a whole bunch of money overall). This seems to be the "safest" solution.
They would need to impose some type of "wash sales rule" for people selling their homes at a lost and taking this huge deduction (just like selling a stock at a lost and disallowing re-buying the same or very similar stock within 30 days). However, in this case, the government should impose a law (say no one can re-buy another home and sell at a profit for 3 years) to stop people from profiting in a short amount of time.
I love the idea...of course, I sold a home this year and took a loss I actually have mentioned this idea on this board before, and got similar responses.
I love the idea...of course, I sold a home this year and took a loss I actually have mentioned this idea on this board before, and got similar responses.
It seems there are 2 different views on this topic. You and I are in the same boat.
The problem is that that people do not realize real estate is an investment (it is a home but still an investment) and should be treated that way.
The proposal you and I are for (tax deduction for real estate lost for regular folks) benefits everyone. The government takes less of a hit. The mortgage lien holders are happy and the people taking a lost lose a little bit less and gain a tax advantage (they overall are losing money).
I think people on this board do not want high income earners getting any advantage (when in essence we are trying to save the country millions/billions of dollars in taxpayer subsidies if people just decide to short sale or walk away from their homes and everyone takes a hit).
I do understand the problem because my older son is going through the same kind of loss. However, it is really a lot of ask tax payers to pay the difference for any purchase where someone had to take a loss in a purchase-reselling scenario. The long term gain is that we will all come out of this mess being wiser investors. Meanwhile, this will be hard on a whole lot of folks out there and my heart sure goes out to them.
You're presuming all the people in trouble can even sell their home and realize a loss. Most aren't and it's hitting reo-ville.
And doesn't this have to do with sellers not pricing their homes realistically in a lot of cases? This would at least give them an incentive to price it to sell.
Set the price where it should be set and the house will move.
Not sure how this would help people that don't have the cash to clear title. I mean you file your taxes once a year, so how does this help the seller who has to bring $200,000 to the closing table in order to clear title for the buyer say...in July?
Not sure how this would help people that don't have the cash to clear title. I mean you file your taxes once a year, so how does this help the seller who has to bring $200,000 to the closing table in order to clear title for the buyer say...in July?
I didn't say this would help everyone. I said this would help a small amount of people. If Obama (with his speech on Wednesday) says he will try to help 4 million homes out of 12 million future foreclosures by using taxpayers money on people, than this proposal will help 1-2 million more homeowners.
Congress is passing a stimulus package ($8000) for first time homeowner. This will only cover the lower end of the housing market. Assuming Obama's proposal on Wednesday will help people in the middle end (the 300-600K) housing market. My proposal will help people in the upper end (600K and up) housing market at least migitigate their loses (and not rely on government bailout money).
Again, we can't help out everyone. Most people I know who own million dollars homes are not super rich but they have at least 400-500K in cash assets to cover at closing.
These people can easily just walk away from their homes and just rent for 5 more years and let their current home go into foreclosure. They'd rather just keep their cash if there is no tax benefit into selling at a lost.
And there are people who are just living beyond their means who truly cannot be help.
I think the main issue here is that it feels unfair to me as a homeowner that someone can deduct a loss on stocks and other investments, but I can't on my primary home. Why? To discourage people from looking at their house as an investment in addition to a place of residence? That will never happen.
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I actually have mentioned this idea on this board before, and got similar responses.
