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So it looks like the cutoff line for not having to pay capital gains tax on the sale of a home might be going from 2 years to 5 years in the bill as well.
That would be a stealth middle class tax cut and generate a lot of tax revenue from wealthy people selling off their multi million dollar mansions.
I could probably count on my two hands....
1. Those who don't buy another house - therefore negating the capital gains (no matter how small).
2. Those who make that little on a house who, being in lower (or no) tax brackets aren't going to owe anything much anyway.
3. Those who actually make a capital gain after many years of spending money (deductible) to replace capital equipment like A/C, etc.
It's going to be a LONG time before most of the USA ends up with capital gains on their residential properties. I own 3 properties - one bought in 2005, one in 2007 and one in 2013. None of them are worth more than I paid and I don't expect them to be....for a long time if ever.
Sounds like a pipe dream. Schiller has done the numbers and Real Estate goes up historically about 1% a year.
So Joe Sixpack might get a night at the ball park with beer as his savings someday from a "stealth middle class tax cut" like this.
I keep reading these posts and scratching my head - wondering if people were taught the difference between thousands of dollars and BILLIONS of dollars. For whatever reason people seem to equate them.
The Simple Truth is that this....whatever you call it...is about
1. Borrowing more money and adding to the national debt and deficit for a LONG time. And - doing so when interest rates are going to climb, therefore adding even more to the payments.
2. Giving BILLIONAIRES amazing tax breaks.
3. Giving the rest of us some lottery tickets - we may win $200 or we may lose $200.
What happened to the Tea Party where EVERYTHING was about debt and deficit reduction? Did they just disappear off the face of the earth once someone said "free money for you"?
Been hearing economic analysts talk about it how the Republican tax plan will have the effect of crashing real estate. That is a good thing.
Well how about sharing with us what economists and where have you heard this? I doubt it will have any impact on the real estate market. About the only thing that affects real estate is a recession or high interest rates.
1. Those who don't buy another house - therefore negating the capital gains (no matter how small).
2. Those who make that little on a house who, being in lower (or no) tax brackets aren't going to owe anything much anyway.
3. Those who actually make a capital gain after many years of spending money (deductible) to replace capital equipment like A/C, etc.
It's going to be a LONG time before most of the USA ends up with capital gains on their residential properties. I own 3 properties - one bought in 2005, one in 2007 and one in 2013. None of them are worth more than I paid and I don't expect them to be....for a long time if ever.
It is also highly location dependent...
I live in the SF Bay Area and have a lot of friends in the Seattle area.
In my little corner of the Bay Area there have been staggering gains.
I followed a 1922 home of 1100 square feet in Oakland CA
In 2007 it sold for 510k...
In 2009 it sold Foreclosure for 100K (20 years appreciation vanished)
in 2016 it sold of 600k
A home I owned/sold for 255k in 2005 was later sold for 350k in 2007 and then again sold foreclosure for 70k and is on the market right now for 475K
A contractor friend of mine had several rentals and when the 500k married exclusion kicked in he and his wife moved in each for 2 years and sold... realized 2M clear of taxes after deducting all improvements/costs... they bought a beautiful Tahoe Lake View home in Incline Village in the middle of the process which continues to appreciate and has Nevada Taxes.
My only point is there are places where appreciation has been staggering...
If real estate was a no brainer... please explain the Financial Meltdown of 2009-2012?
That doesn't count, totally separate issue. That was people that couldn't really afford a house being given a loan.
Real estate is easy if you have the money. If you were a millionaire in 2009 it was the BEST time to buy property. Every moron knew that. The recession actually helped some people make a ton of money they just had to sit on their investment a few years. .
The problem is the people that use real estate as a profit maker are screwing all of the people that use real estate as just a place to live. Imo the govt needs to step in and do something about this. Also this matter is made worse by the fact that the U.S. is letting foreign investors buy up land. This is complete stupidity and is something that needs strictly controlled.
Agreed.
I definitely think the government needs to provide incentives for people to buy houses that they plan to live in for decades, and needs to provide disincentives for people who never plan to pay off the mortgage and instead plan to flip the house in a couple years. It seems ridiculous when everyone in "hot" real estate markets is taking hundreds of thousands of dollars in debt so that they can temporarily "own" and "asset" until they find a willing buyer who will do the same for even more money. It's a pyramid scheme or a game of Monopoly and has turned many nice metro areas of America into being completely unlivable in the long-term.
I definitely think the government needs to provide incentives for people to buy houses that they plan to live in for decades, and needs to provide disincentives for people who never plan to pay off the mortgage and instead plan to flip the house in a couple years. It seems ridiculous when everyone in "hot" real estate markets is taking hundreds of thousands of dollars in debt so that they can temporarily "own" and "asset" until they find a willing buyer who will do the same for even more money. It's a pyramid scheme or a game of Monopoly and has turned many nice metro areas of America into being completely unlivable in the long-term.
If you're a first time home buyer you should get a huge incentive but if you sell it within 20 years you should get penalized and lose whatever incentive you were given. Along with another penalty on top of that possibly.
The real estate market needs strictly controlled now and regulated. It is the only way to prevent the problems in large metros where people are forced to move to for jobs, from spiraling completely out of control.
I definitely think the government needs to provide incentives for people to buy houses that they plan to live in for decades
Why should the government try to get people to stay in the same house for decades?
People might turn down good jobs opportunities that are elsewhere and instead, stagnate in their current situation.
Or maybe they got a good job 40 miles away and now they have a long commute because they want to keep the government "incentive" to stay in a home (they'd rather sell and move closer to the job).
Maybe they live in a crime ridden area(that wasn't crime ridden before) and they want to sell and move to a safer area so their kids don't get killed by gangs. But there are financial incentives to stay in their home, so they stay put.
Maybe a guy gets married and decides the sell his "bachelor pad" 1 bedroom condo in order to buy a bigger home with his spouse, in a better school district because they plan to have kids.
Last edited by sware2cod; 11-05-2017 at 12:11 PM..
That doesn't count, totally separate issue. That was people that couldn't really afford a house being given a loan.
Real estate is easy if you have the money. If you were a millionaire in 2009 it was the BEST time to buy property. Every moron knew that. The recession actually helped some people make a ton of money they just had to sit on their investment a few years. .
That is not how it went down here... plenty of my co-workers, friends and even Doctors/Lawyers did strategic defaults... they could afford to pay but decided they were losing money and cut their losses...
The Docs and Lawyer did it cleverly... they bought another home first... better and cheaper than what they had and then walked away from the first and leaving someone else holding the bag.
My more immediate co-workers only thought they were smart... said I can rent for half the cost of owning and that is exactly what they did... now the homes they walked away from and trashed their credit are worth much more and they have 5 to 7 years of rent payments with nothing to show and rents have doubled for many.
Most of the mortgage loans I have are ones I couldn't qualify for... but it was the best thing I ever did even selling my car or working extra jobs to make my payments... I put down enough so the seller would take a chance and carry the note... often the property had problems so no chance of going conventional.
The Foreclosure Crisis represented a true shift in thinking away from honoring your commitment and doing what is right making it OK to screw the other guy.
No one can force anyone to borrow money...
As for rentals... plenty have gone down that path to say never again.... it is full of minefields in a place like the Bay Area with Rent Control, Just Cause Eviction, Business License Taxes, Gross Receipt Taxes... etc...
I bought my first home at age 22 and still have it... no one helped me and it was scheduled for a condemnation hearing... it was the least expensive single family home on the Oakland MLS at the time... I had been saving and paying into Social Security since age 12 and sold my prize Camaro Z28 that I had restored to become a homeowner... all 600 Square Feet of a 1910 Cottage on a 25x100 East Oakland lot with boarded up homes all around me...
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