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Cept that the first $500K ( assumes married) profit on your primary residence gets a free pass.
Most folk, in most areas, never experienced a gain like this on their primary home even at the peak of the bubble.
It would reduce quick buck schemes that lower rates promote. I am not against lower rates over very long terms, after all, that used to be the purpose of investments.
Now, we look at short term gains, put more money into it, wait for peak, sell, let the bubble happen, buy more, resume cycle. Take dot com bubble for example. Its not because internet was to be a fad.
I'd have no problem with a much longer definition of "long term" (say, five years?) for the reason you give. But I do think that, to the extent possible, lower-income people should be encouraged and not punished for investing.
And I'm fine with short-term gains being taxed at the regular income rates, although again from the point of view of lower-income investors, it has to be acknowledged that being lower-income means you don't have the comfort room - there are legitimate emergencies which can frustrate a lower-income investment plan, and just like IRAs, perhaps short-term gains should have a few emergency "get-out clauses". Someone earning say 30K, who nevertheless has managed to scrape together a thousand or two, should have some sort of reassurance that in an emergency, it will be possible to cash in the mutual fund in less than five years without paying higher tax rates on it.
Cept that the first $500K ( assumes married) profit on your primary residence gets a free pass.
Most folk, in most areas, never experienced a gain like this on their primary home even at the peak of the bubble.
correct on the primary residence
but if its not the primary residence...your screwed
an example
couple brought a house in 1964 in NY for 20k
couple moved from NY to NC in 1990. but kept the house in NY for their children to rent while going to college
2004 couple sold the house in ny for 450k....got hit with massive taxes from NY, federal governmt(capital gains), and NC ....for over 80k worth....sorry but getting stuck with a 80k tax bill(s) sucks
Exactly - plus anyone else whose primary income (i.e. SSA) is untaxed, therefore their income rate earns them the lower cap gains rate. For instance, the 40-something widow with children who invested her hubby's life insurance to pay for the kids' education, while she lives primarily on survivor benefits and part-time work so she can be home when school is out.
They are surviving on $8K a year and have cap gains ?
You have links for the stats ?
many seniors have invested in t-bills, t-bonds, and us savings bonds
many seniors own homes, or multihomes
many seniors make more than 8k a year btw
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