Hi everyone. Haven't posted for a while, but this one has me a bit concerned. This thread from another "city" Real Estate forum was abruptly closed in the middle of the night, and moved to their "Controversies" forum where it will soon be buried from any public view. http://www.city-data.com/forum/poli...s/2851501-gop-tax-plan-change-rules-sale.html I encourage you to read the entire thread as there is some good info in there. The rug is getting ready to be pulled, and not just to current people who have their homes listed for sale, but for just about anyone who was recently planning on selling at a tax exempt level. You see, under the current rules people can sell their homes tax free as long as they have lived their 2 of the past 5 years. What this new bill will do is effectively change those requirements to 5 of the last 8 years! On top of that it will become effective on 12.31.17, just 4-5 weeks from now! On top of that, if you didn't save your receipts while fixing up your home over the past years, decades, whatever, than you WON'T be able to claim those costs as being tax deductible. What's that mean? You guessed it, most people who sell after 12.31.17 will effectively be double taxed for selling their home!! This means ANYONE who has there house for sale right now, who were planning to sell tax exempt, will now be charged as income if the owners sells at a profit. But it's much worse. And basically NOBODY knows about any of this, not even the Senators who are getting ready to pass it. This new plan will likely put a choke hold on Real Estate sales volume, and we should also see the affect continued through much of the economy. This Tax Bill, particularly sec. 1402, is designed to keep people put for longer periods of time. But I believe we will see grave consequences for doing so. To be fair, I should disclose that I voted Repubs nearly across the board last year, but this is getting scary what they are about to do. This move is about them, the Gov't making a HUGE power, land, and money grab. If this thing passes, we're toast IMO. What do some of you think?
I didn't know about these. If they're in there, it will probably have the negative effects on RE sales you mentioned. All else being equal, not good measures to take. Shouldn't be implementing this kind of thing. But, unfortunately, all else is not equal. Our central bank, along with others, is composed of certifiable lunatics that are hell bent on jacking up asset prices to ridiculous levels, which almost always results in catastrophe. I would say these measures in the tax bill might be something akin to macroprudential regs that seek to tone down the RE mkt before it becomes Australia or Canada, and we have an even bigger problem on our hands. If we could only fire all of them.
Not technically correct. "Improvements" are capitalized and added to cost basis. "Replacements" are not, nor are they deductible for your residence. Requirement to keep receipts, if questioned in audit, is same as always. No, not "double taxed". Same tax if qualified for having lived there long enough.... just have to live in the primary residence 3 years longer to qualify for the capital gains exclusion. I know a RE developer... who buys fixer-uppers, lives in them for 2 years or so, then sells and moves onto the next project. In doing so, he avoids capital gains taxes...has avoided LOTS of income tax for decades. Perhaps this law change is designed to tighten that "loophole"? Consequences to the housing market? Likely will be some.
Fuck, was counting on using the tax exemption when selling my current property. Now I get to be stuck in this shitty place 3 more years or take a tax hit? The GOP is the scum of the Earth. I really thought they would leave the home owner exemption alone since I had not read anything about it. This is a major issue. If true ( I haven't seen any legitimate source on it) they should at least have a grandfathering clause for current owners. Looks like it's true: https://www.usatoday.com/story/mone...lines-sweeping-changes-individuals/825232001/ http://www.chicagotribune.com/business/ct-biz-gop-tax-plan-mortgage-deduction-20171103-story.html
Sure there are plenty of guys like you describe, but why should legitimate home owners get the shaft because of it. Now, if we're unhappy with the area or job, we've got to suck it up? And besides, did your developer friend leave the properties in worst shape than he found them? I took a chance at a foreclosure at an up and coming neighborhood, and know many investors who do the same. The area is better for it, property values have gone up, and so have local and school taxes from it. Now I see more white collar types moving in as well.
If my property value went up 100k, 50k of which was due to improvements using post-tax ordinary income money, and I didn't keep receipts, how is that extra 50k expense not double taxed, once they see 100k "gains"? Especially if the owner was expecting to use the exclusion and was not careful to keep receipts?