Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Maybe so. If so thank you for the correction. As I stated I haven't had the time to check into it hence that's why I recommended someone do research if it may affect them.
Short summation - the topic post was will this crush the RE market? Short answer-no and therefore I'm not losing sleep over it.
Didn't "Bo talk about" that ONCE in 4 home sales that this would have affected him?
Quote:
Originally Posted by BoBromhal
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.
Ok, I did over look the little < symbol you used as a shortcut to grammar. Fair enough.
So you've benefited only once rather than twice. But just because you weren't a bit more on the ball, or were perhaps you were still ignorant of the law at the time you sold @<2yr, doesn't mean that millions of others haven't done better with the current laws.
The fact that you didn't make better use of it, adds weight to the notion that the people who have the least amount of direct skin in the game seem to be the ones who care the least that the current law will be changed.
Quote:
Originally Posted by BoBromhal
You really need to read some of the lunacy (see bolded above) that you're typing...
Because I think it's "American" to be concerned that the gov't is getting ready to falsify the past 4+ years of people's activities at home, and deem them as business activities, without first giving those people heads up that they would be taxed as doing business; And because as a human being I feel for all of the thousands and thousands of hardworking people who are getting ready to be shafted; You think that's lunacy?
Well call me crazy.
Quote:
Originally Posted by BoBromhal
EVERYTHING impacts future sales. It just depends on how much.
The question is:
How many CONSUMERS sell their PRIMARY residence within FIVE YEARS of buying it, don't have another exclusion, and would LOSE MONEY on the sale of their home
frankly, the answer is ZERO. Because if you "lose money", then you don't pay taxes.
I'm not at all sure what you mean by this when you say "don't have another exclusion", so you'd have to clarify.
I would however think that many CONSUMERS sell their PRIMARY residence within FIVE YEARS of buying it, and would LOSE MONEY on the sale of their home. Therefore the answer wouldn't be ZERO, because I'm not sure how not having another exclusion would mean they didn't lose money.
Now Bo, I know that you occasionally enjoy a bit of persiflage with some of the board's more knowledgeable constituents. I've witnessed it first hand, and I myself admit that at times I may even find it somewhat entertaining when you engage in such waggishness.
But I really want you to think about this one. And I'd like for you to explain to me how it's okay for the gov't to deem people's past 4+ years of activity as business, without first giving them the chance to understand that their personal home activities would be later be taxed as business income.
And allow me give you one more example as a parallel- even though you've already ignored my RV taxation analogy I suggested earlier.
You have also been (hopefully) contributing regularly to your IRA in expectations that you can withdraw those funds tax exempt at a later date, no?
So would you say it is ok for the gov't to change the law so that all of your IRA gains, from all of your past contributions will be taxed as income?
This one aspect regarding the sec. 1402 article of the new tax plan, as an American and human being, truly do bother me, and I am looking for a bit of solace here.
Last edited by riggy_house; 11-29-2017 at 07:12 AM..
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?
Riggy, I haven't read the bill, so bear with me on this...But I think there are a few things your missing.
Most people don't capture much gain before five years anyway. There are some people that bought in 2012 or 2013 that might see huge upswings in appreciation. I looked at houses in my neighborhood; its a middle class neighborhood, in the type of town that was probably hit somewhat hard by the foreclosure crisis. Not all these "improvements" that you're claiming homeowners don't save receipts for, are considered improvements by the IRS anyway. In any case, surely you have cancelled checks, permits, etc, to establish your basis if need be.
And, if you've done so many improvements into the house as to greatly increase its value, even while living there, the line between "flipper" and homeowner becomes blurred (and I'm not calling you a flipper.) The problem is that emotions get tied into getting taxed for the sweat of your brow, even though you would get taxed if you built furniture and sold it, restored and sold 17 cars a year, etc, etc...
You seem angry. I wasn't trying to make you angry. I apologize for making you angry but I don't need to read the bill. Thank you for posting the information but my point to the person asking the question was to verify information that was pertinent to their situation (because even though they read it on the internet that doesn't make it true-trust but verify).
I know you are not asking the victims in this particular thread but we are one of them. We wouldn't have gotten the full exemption anyway because it was not primary some of the years but I had the formula worked out and we listed. Now we will have to pay not only on all gains but pay taxes on soc sec as well.
Devastating to retired living on soc sec.
Wait, I just reread your post. There is no "formula" or partial exemption. Was it a primary residence for 2 of the last 5 years? If so you may be eligible for capital gains exemptions.
Also those taxes are based on profit and not sales price. You'll have costs that negate your profit margin. The cost of the home, expenses to sell, etc. You should consult a tax specialist on it. Also, these are proposed changes. They may not happen which is why I haven't bothered to learn more about it yet.
How does your social security get factored in to capital gains or is this just a separate provision your referencing in the tax reform bill?
There is a serious over-allocation of resources to housing. Time to burst the bubble.
Even though I am a townhouse owner in an affluent suburb.
What is this "over-allocation" you're speaking of because I'm not aware of it. I assume you want to alter supply and demand in order to reset prices. Instead of removing buyers from the market to create a surplus of housing it would be better to create a larger supply housing where it's needed.
now don't get me wrong - I do believe that generally the government shouldn't be making "retroactive" changes on individual taxpayers.
On the flip side, the government shouldn't be making decisions based on what an individual taxpayer may do this year ... "I was planning to sell this winter..." (you and at least one other, perhaps dothetwist).
But I am on the side of "if the rule was 2 years, don't make the new rule apply to anyone who has owned 2+ years as of 12/31/17". Is that super-clear? I mean, if you bought in the last 12 months, they're not "taking away" some benefit you have, right?
half your other post I can't make sense of, sorry. I have no interest in equating this to an RV purchase.
I've never INTENTIONALLY benefitted from the exclusion. I've never stayed in a house an extra couple of months to hit the 2 year mark. I've also never realized anything close to $250K or $500K on a sale. I've never held a house 3 years as a rental then sold it before the exclusion wouldn't apply.
Let me lay out each purchase:
1. Bought a first house, right as we got married. Moved unexpectedly for job 6 months later. Moved more than 50 miles - that's one exclusion to the rule (I know military service is another). Sold the house and basically lost a little (sale price - commission < original purchase price).
2. Bought a small house in new location. Just the wife, dog, and me. While living in this house is when I became a Realtor, btw. Lived there 5 years, had a baby. House was suddenly "way too small".
3. moved to another larger house, had another child. Stayed there only 3 years, because the school we were assigned to (that oldest child was about to enter elementary school) wasn't good enough.
4. Moved to my current house, where I've always intended on staying until the youngest was done with high school (another 6 years).
will it affect some, several, many, a lot, a minority of individuals? Yes.
A majority of folks who have bought their personal residence from 0-54 months ago? No.
will it ruin the lives of those individuals? No.
will it crush the real estate market? No.
Might this rule even be changed, before it becomes law? Yes.
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.
Don't care to comment on the rest - but the idea of taxing capital gains higher than regular income is ludicrous in my opinion...capital gains are gains on POST TAX investments.
I pay 43.6% in income taxes now...take the leftovers and make some secondary investments, say a rental house...the rent is regular income, but the appreciation on the asset itself is rightfully a capital gain....I bought the home with post tax money, and when I sell, they get a chunk of the increase in value.
I adamantly oppose any additional increases in capital gain rates...it will do nothing more than stifle investment. Why invest it in new business ventures, when its going to be taxed so high?
Lower capital gain tax rates ENCOURAGE investment....in my opinion we need to get the capital gain rate below 10%
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
