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True. But it's a tax increase on the middle class, particularly seniors. They're aiming at baby boomers, to try to make up the huge deficit that's coming down the pike.
This is bad law. An older person who has lived in her home for 40 years needs to sell to downsize, but may have to pay a tax on that, like she's a business person? That's just wrong. And harmful. Because probably one of the reasons she's selling is to live on the money.
In your scenario they are exempt. If the proceeds are over 250/500 depending on married status they'd still be paying capital gains so I don't see a difference in this scenario of old vs. new. If there is a change it's likely not significant.
Unfortunately the proposed tax plan applies to ALL SALES taking place after 12/31/2017. That's my objection to this, that there is no 'grandfather' clause.
We bought our home in 2014 to be near an elderly parent who needed our assistance. He died in late 2015; it took over a year to settle his estate. We have no reason to keep this home now that he is gone and his estate is settled, but our options are to either keep the home until 2019 or sell and pay tax on a substantial capital gain.
Not to be insensitive, and I don't know for sure because I'm tax ignorant, but if it's an estate do they fall under a different category where it is no longer eligible for the CG exemption anyway? You should check with an accountant on that.
What is your substantial gain? See Bo's example but unless it's in a market with significant appreciation and you've only had the home since 2014 I don't think your gains will be that much.
Unfortunately the proposed tax plan applies to ALL SALES taking place after 12/31/2017. That's my objection to this, that there is no 'grandfather' clause.
We bought our home in 2014 to be near an elderly parent who needed our assistance. He died in late 2015; it took over a year to settle his estate. We have no reason to keep this home now that he is gone and his estate is settled, but our options are to either keep the home until 2019 or sell and pay tax on a substantial capital gain.
Not grandfathering in houses purchased before the law went into effect is extremely unfair. We purchased a home in a really bad area, I sent pictures of our neighborhood houses to my brother, he was shocked and asked what kind of realtor sold us this house. The houses are hidden by fir trees..
I read that you can use relocations due to jobs and are able to pro rate the time lived in the house and have it deducted from having to pay capital gains tax. We can use that for sure, because there is no way I'm living in this neighborhood for five years.
Not to be insensitive, and I don't know for sure because I'm tax ignorant, but if it's an estate do they fall under a different category where it is no longer eligible for the CG exemption anyway? You should check with an accountant on that.
What is your substantial gain? See Bo's example but unless it's in a market with significant appreciation and you've only had the home since 2014 I don't think your gains will be that much.
The house is ours, not part of the estate. We bought the home to be nearer my FIL, he stayed in his own home. Now that he has passed on, there is no reason for us to stay in the house we bought in 2014.
I just called and emailed some Senators, and hopefully a lot of people will contact them to register concerns. It's not fair to many of us who will be blindsided with no chance to make decisions based on this bill.
I just called and emailed some Senators, and hopefully a lot of people will contact them to register concerns. It's not fair to many of us who will be blindsided with no chance to make decisions based on this bill.
Vote is tonight or tomorrow. No time for changes. It is a rushed bill and badly flawed.
I read it this way: they are trying to get around people who own multiple properties and periodically take one over, so that they can meet the 2-year rule, sell it then get the tax break. Then evict one of their other tenants, take over that house and do it all over again. Now they have to claim that one property as their principal residence for 5 years out of the previous 8.
And if they are making boatloads of money in real estate anyway, then they can't claim the tax break at all.
It should have a greater effect on speculators and investors than it does on individual homeowners. It may serve to depress home values since they become less attractive as an investment without the government handout.
This is how I see this bill and I don't really have a problem with it.
You are only taxed on the gains you make with selling a house. Sure, with prices skyrocketing we all want to make a killing. But so do flippers and investors who are driving up the prices for everyone. If a house is part of an estate I do know there are lifetime tax exemptions and other ways that can reduce capital gains tax that you pay so this won't hit the elderly owner like people think it will.
The house is ours, not part of the estate. We bought the home to be nearer my FIL, he stayed in his own home. Now that he has passed on, there is no reason for us to stay in the house we bought in 2014.
How much gain do you think you have on this house?
Think about every dollar you spent in closing costs to buy the house, and every dollar you'll have to spend in closing costs to sell the house- almost all increase your basis in the home. If you're telling me that you bought a house three years ago and that it has gone up in value so much that you still have a gain even after closing costs (and that the gain is enough to be worried about), then you're in the wrong line of work.
Last edited by NYCresident2014; 11-30-2017 at 01:19 PM..
Why are people so eager to punish flippers? It seems like they are doing a service in taking ugly decrepit houses and making them desirable. If they get to use the capital gains rate for their improvements they are probably passing along part of that so-called windfall to the buyer, real estate sales industry, materials providers, etc. Just because some people don't like the idea of the astute "flipper", why make it tougher on everyone else?
BTW, any couple that makes over 500K profit on a home within 2 yrs had to have been pretty dang lucky or pretty darn smart...or pretty sneaky and will be found out, lol.
I agree In our area pretty much no one will touch an "in need of updating" house. They have the money to pay for granite, stainless and hardwood and no inclination to suffer the reno.
If it were not for the contractor flipper businessmen those older homes would sit and deteriorate and just become neighbourhood eyesores.
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In our area pretty much no one will touch an "in need of updating" house. They have the money to pay for granite, stainless and hardwood and no inclination to suffer the reno. 
