Here’s a good review of the recent Dave Camp tax proposal:
http://www.latimes.com/business/realestate/la-fi-harney-20140309,0,7914993.story#axzz2vWoDGLkZ
Under intense scrutiny will be the two-out-of-five-year rule – Congress will find it irresistible to tinker with so much tax-free money:
Under Camp’s proposal, you’d need to own your house for five out of the preceding eight years to claim a tax-free exclusion and you could exercise this privilege only once every five years. Capital gains exclusions for home sellers with high incomes — $250,000 a year for singles and $500,000 a year for joint filers — would be phased out altogether over a period of years.
If Camp’s idea of exercising this ‘privilege only once every five years’ does get approved, it should curtail the move-up market.
Here’s why:
1. People get too comfortable. After 2-3 years, it still feels like you just moved in and there isn’t as much attachment to the home. After five years, real roots have been established.
2. Kids have more friends in the neighborhood. Kids grow up a lot in 5-6 years, and they don’t mind imposing their ideas upon you regarding a move.
3. Remodeling will be a more-likely route. If the two items above are bearing down on you, then just fixing the old house will be a happy compromise.
More of today’s homebuyers are already looking longer-term than any since the 2-out-of-5 rule was enacted in 1997 – let’s face it, the rah-rah days are over. Changing the law will just be the final straw that will cause people to stay put.
Consider these changes when buying your next house – it may have to last you for a long time, and maybe forever! Get good help!
We’ve had a change in the font type here.
It turns out the previous Google font wasn’t compatible with Google Chrome – go figure! Those who prefer running Chrome should see the the text better now.
The bubbleinfo mobile app should be ready soon – in the next week or two!
If anything gets the listing going that will (at least in the short term)
Once enacted that will hit the market like a car going from pavement into a mud bog.
I wonder if these geniuses figured how much that will slow the economy and there for tax receipts.
Probably not that would be thinking beyond step 1.
OK so if no one sales their home every two years and just waits five year that will increase the tax revenue by hmmm lets see about Zero or less.
Well at least there will be less money floating around, there we accomplished something.
As someone who took advantage of this in ’05 and made the easiest $500k I’ve ever made, my questions is: Why should any of the cap gain be tax free, ever?
We aren’t moving until the youngest of our kids is off to college or JtR can get us a million. The youngest won’t start college until 15 years from now.
Politicians just can’t resist the lure of “fixing” things.
my questions is: Why should any of the cap gain be tax free, ever?
Grossly unfair to renters.
Shall we scrap it all and go for flat tax?
my questions is: Why should any of the cap gain be tax free, ever?
So if you Move you should automatically lose 30% of your homes value to the tax guy.
Yea that is going to help the economy. yep buy and stay forever, don’t move or we will get you !!LOL
Well until recently anyway most of a homes increased value was due to inflation, so the exclusion was I think was made so people could move without a tax burden due to inflation of their home because in most cases they were just buying another home.
Now take that away and you create an incentive to NEVER move.
The previous way they taxed real-estate gains was onerous – you had to buy a bigger home to defer the tax, and it caught up with you eventually.
The 2 out of 5 became law in 1997, and we have been in bubblicious territory ever since.
Is a home a home, or an investment? They need to start with that question, and figure out a tax accordingly.
IMO it was 1981
OER
That has been the cause of the late 80’s bubble as well as the last.
Also lead to the destruction of the middle class.
But that would be a long discussion
In 1981, I was in the mosh pit. Maybe I shoulda stayed there.
Why not go back to the one time exemption rule over 55? But make the exempt amount $250 or 500k. Then before this go back to the old carry over rule? That would allow downsizing upon retirement (and/or moving to a less congested area, where house prices are lower).
I like it!
“In 1981, I was in the mosh pit. Maybe I shoulda stayed there.”
Getting on the I5 in the morning is kind of like a mosh pit, just turn up the Radio.
I’m using Google Chrome and haven’t seen any activity at Bubbleinfo for many weeks. Nice to see things clearly again!