The mammoth recent housing bill has gazillion provisions in it, covered in detail on about 600 plus pages of fine print. There is the potential mortgage refinance assistance for those in payment distress, there is the tax credit for first-time homebuyers who qualify and so on. Lots of material that when all of it is implemented and working in the months ahead it is expected to provide a helping layer of stability to the still wobbly mortgage and real estate markets.
One of the new stipulations touches on vacation properties and it can have an unknown effect on Las Vegas where a good portion of single-family homes and condominiums are purchased as such. In short, owners of these are going to lose the capital-gains exclusion when they are sold. During the last decade or so owners did qualify for the $250,000 - $500,000 for couples filing jointly - profit exclusion as long as they played the game of moving from a primary residence to a second home to another principal residence to comply within existing tax laws. But that sort of hopping around will be over soon.
According to the new law, the tax burden is based on the days the home was not used as a primary residence and any profit will be treated as long-term capital gain. As always, consult a tax professional for complete details on these changes. The law will go into effect January 1, 2009, so any sales closed this year won't count.
This modification could make those considering a second home purchase in Las Vegas take another look at it. Many are pretty savvy about these issues and if the numbers don't make sense they probably forgo the acquisition. But then again, a lot depends on so many other financial issues of buyers and their living preferences that it may not matter one bit.
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