Mortgage Relief H.R. 3648 -- TAX RELIEF IT ISN'T!

Real Estate Agent with Beach and Luxury Realty, Inc.


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?




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!!!- )




    ? SO   WHAT's  YOUR  THOUGHTS & COMMENTS  on the long term outcome of this ACT of Congress ?



-----------------------------------------------------------------let them know you still can read the small print!


Comments (4)

BLRGUY(Beach & Luxury Realty Inc) - Saint Pete Beach, FL
BLReast..Three things are certain in life....death,taxes and Congress Stinks!LOL
Oct 06, 2007 10:17 AM
Cris Burlew
Beach & Luxury Realty, Inc. - Saint Pete Beach, FL
Broker ~ St Pete Beach FL Real Estate

That's usually how they do things. Do away on one side only to slide it all over on the other side.

While this will help those losing their homes, we do have to seriously look at how those with second homes & investment properties will actually be affected.

We just have to remind our customers that they need to speak with their accountants regarding tax related questions, especially with passage of this bill.

Oct 06, 2007 01:24 PM
blreast therealty4u
Beach and Luxury Realty, Inc. - New Smyrna Beach, FL


Guys, somehow the advantages of so-called "tax savings" on those losing their homes has overshadowed a tax code rewrite in apparently everyone's eyes- another shift to increase taxes and complicate the tax code further.

 (why the argument isn't made that loan forgiveness - that this is just a  backhanded  type or form of accounting similar to    a section 1031 deal gone bad?  Because in reality- the borrower NEVER, repeat NEVER touched the money!  This is just a trading of property and instruments from the seller's side at best, or he "pays" actual cash to be rid of it! (Now does the IRS allow that deduction?) -so how justify the tax law to begin with, rule it invalid ...

By that logic, If I list a home for $300,000 and a persistent negotiating buyer works it down to close at $250,000- then can I send him a 1099 for $50,000 - for him to pay taxes on?  He'll actually have  WORKED to get that  from me!  and the tax  or other appraisal says it's a $300K house....  

 If a parent lends a child money for a new car, kid pays for awhile,then  Dad forgets the loan amount still outstanding when the child WRECKS IT - its not a  deductable expense is it?  Nor did the kid "profit"  by the few dollars the junkyard man pays dad who has the title...

just like here, how many mortgage companies are actually losing equity - when the closing fees and 'interest' paid is accounted for..     They many have only lost that 'profit' called interest..maybe they find they involuntarily had squatters, but... so let's see if you lend too much money to someone who has little chance of repaying... and you get most all of your money back? And you get them out without six months of hassle,damages, & other costs-and quickly get equity back to reinvest.. 

..Now how did they give any "income" to the borrower losing the house???


Oct 06, 2007 04:59 PM
Wayne Miller
San Diego, CA

Any kind of tax increase is not a good thing for the housing market, it just to fragile right now.  Let's see what this bill will do. 

Oct 07, 2007 05:23 AM