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Have agents been seeing any trends by sellers' to rush to sell by DEC 31, 2012 to avoid the ACA imposed increased in capital gains tax? Are Buyers' using this justification as a point of negotiating leverage with Sellers?
"Expiring Bush Tax Cuts
Starting in 2013, the maximum federal income tax rate on most long-term gains from real property sales is scheduled to be 20% (up from the current 15%). However, a lower 18% maximum rate will apply to long-term gains from properties acquired after Dec. 31, 2000, and held for more than five years (up from 15%).
If you sell a rental property for a gain, a higher 25% maximum rate will apply to the amount of gain attributable to your cumulative depreciation write-offs (same as the current rate). Remember: Those depreciation write-offs can actually cause a taxable gain when a rental is sold for less than the amount you invested (because your basis in the property for gain/loss purposes is reduced by depreciation deductions).
Short-term gains from real property sales and positive operating income from rental properties (when rental income exceeds your tax write-offs, including depreciation) will be taxed at a maximum rate of 39.6% (up from 35%)."
Thanks
No, my area is not seeing an increase in listings. In fact, we're about 20% low on inventory year over year. The capital gains tax affects so few people that most in my area aren't worried about it. For primary residences, you have to have a capital gain of over $250k for single and $500k for married and Texas doesn't really see appreciation like that. Those are few and far between.
As for investors, rents have gone through the roof so any additional tax they end up paying later will be more than covered in the 14% rental increase we've seen year over year.
I'm in lending in San Antonio, and although I'm seeing a rush to list and sell, it's an uptick in short-sales b/c the MDRA is set to expire at the end of the year. I'm also seeing the buyers from '06-09 having to bring cash to close. Their home values are hammered b/c they are appraised against shorts and foreclosures around them. Once we can clear them, I think we will turn the corner.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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So in the example given, the imaginary investor made $130K in one year in a variety of investments. Oh the horror of only having $90K left in your pocket instead of $100K. Oh yeah, plus the $220K of what would have to be considered ordinary income in the example.
So in the example given, the imaginary investor made $130K in one year in a variety of investments. Oh the horror of only having $90K left in your pocket instead of $100K. Oh yeah, plus the $220K of what would have to be considered ordinary income in the example.
This does not effect me, but I for one like to minimize my federal taxes in every legal way possible. I have no interest in funneling money to the government to squander.
$10,000 may not be much to you, but its a heck of a lot to me....so yeah, I do see the horror in having $10,000 less in my pocket at the end of the day.
This does not effect me, but I for one like to minimize my federal taxes in every legal way possible. I have no interest in funneling money to the government to squander.
Agreed....
Don't want to turn this into politics but funny how when a Presidential candidate does this he's "Not paying his fair share".
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by marksmu
This does not effect me, but I for one like to minimize my federal taxes in every legal way possible. I have no interest in funneling money to the government to squander.
$10,000 may not be much to you, but its a heck of a lot to me....so yeah, I do see the horror in having $10,000 less in my pocket at the end of the day.
Sure $10K is a lot to me. I'm not making $130K a year off what is essentially passive investment income as in the example. And no, I don't go out of my way to pay more than I owe, my tax guy would like me to claim my socks as a write off.
I'm just saying that the example given is probably a worst case scenario and was selected by the OP to justify a "Taxmageddon" of dubious virtue. Freedom isn't free and roads and bridges didn't magically appear for free either. Government isn't very efficient, but we all gotta live here and it costs money to pay for the things we have in common.
I really don't want to get into the politics of it either, just saying if I won $100 million in the lottery, a big slice of it would end up in the hands of charitable organizations without having to vet it by the tax code.
If you lived in your house for at least 2 of the last 5 years, you are EXEMPT from paying taxes on any profit if profit is below $500k(married) or if profit is below $250k (single).
Not if the home sells for $250k or $500k. But exempt from PROFIT of $250k or $500k.
Due to this exemption, most folks are not affected by this capital gains tax no matter what it is.
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