Maybe the taxpayer as well as those in the real estate profession better look a little deeper how this tax bill will affect them and their taxes. LET'S HOPE some TAX ACCOUNTANTS will look deeper into this and economists will show its long term effects upon the vacation/second home markets.
Realize thinking about income taxes at this time of the year isn't the blog you'd perfer, but let's quickly look at how this supposedly "relief act" may change how yours or a client's second/investment home might be affected if they intended to make it a principal one: JUST BY LOOKING AT THE AMOUNT OF TAXES RAISED SHOWS ITS WORTH PAYING ATTENTION TO!.. (note, this TAX change is est. to raise revenue by over $2 billion in the first 10 years alone!- so no loss in tax income by the 'forgiveness') In the longer term- ISN'T THIS A TAX INCREASE? A NICE SIZED ONE! And just how many more billions in tax increase in the decades to come!
Read the summary for yourself:
read this summary about if some residences not used all 5 years prior to the sale:
Now how about you or your mom and dad that converts a second home and for whatever reason needs to sell it prior to five full years. What about retirees or multi-home career people who live in more than one home during the year? Capital Gains, by the way , are set to go UP again in just a couple of years..
Or for whatever reason the owner decides to sell before five years of "principal home usage"? Are such longer term owners to be treated different than the buyer next door who bought for a principal from the beginning?
What I'm NOT Happy about is, that little sneaky END RUN to up the capital gains tax on second home owners..
Are they always looking to raise TAXES!... give a little but (with baby boomers about to spend, sell etc.) make sure to TAX a little harder and TAKE a little MORE!!!!
Let's not gloat over a little tax help for those losing their homes.... (they may be in the rental market for awhile)... if it also makes vacation homes, etc. look more like a great expense in a declining or flat market.
With property taxes (and insurance in coastal markets)... going up.. adding additional taxes to sell (And buyers do buy as investments).. Any increase in tax on the sale... will only make stocks, other investments look the better..
I don't need to remind anyone how much of the market in 05, 06 was vacation, investment, second homes..
Let's see, mortgage requirements tightening, those losing homes likely many out of market, and the feds raising the capital gains tax on selling principal homes if previously 2nd homes....
Is that going to be such a big blessing? Where is NAR's political arm on this one?
Writing off loan forgiveness is one thing.. Why making it harder on the real estate industry by raising taxes on another part of it- when many are striving to get it into stronger sales territory- doesn't look like the best approach..
But what does anyone else think?
TO ANSWER THE QUESTION ABOVE: WHERE'S THE NAR?
http://www.realtor.org/press_room/news_releases/2007/passage_mortgage_cancellation_tax_relief.html
Hint: they 'applaud' but how will the public respond when they find that 2nd home used as their primary just become taxable in the short term? How many won't be buying second homes until decades later then? WAIT & see again?
Let's think this one out a little more, this tax is likely to hang around for long after the mortgage situation is dealt with in the next couple of years..
? Am I alone in wondering if the vacation market may be affected? will more come on the market now- when least needed? rather than convert later- if there is a possibility of different tax treatment by taking a chance on such conversions???
Are they helping the tax bills of people losing their homes, many likely to be out of the market for some time, and at the same time adding vacations homes to the sales inventory, and decreasing interest in such investments?
And yes some of us will make Lemonade out of the lemons, but why should the feds not follow through on helping the total real estate market..
. rather than taking from Peter to pay Paul's tax bill (that wouldn't have been increasing tax revenue anyway in a normal market!!!- )
OH, DO NOT FORGET THOSE CAPITAL GAIN RATES ARE SET TO GO UP AGAIN IN JUST A COUPLE OF YEARS TOO!
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? SO WHAT's YOUR THOUGHTS & COMMENTS on the long term outcome of this ACT of Congress ?
..............GOT THEIR EMAIL ADDRESSES?
-----------------------------------------------------------------let them know you still can read the small print!
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