I buy a stock for $100 and sell it for $100,000, I pay capital gains tax (as I should) on the gain.
I buy a house for $100,000 and sell it for $200,000, as long as I've been there for two years, I get the $100,000 gain (less costs) tax free.
Anyone see a problem here? I guess not - as nobody sees a problem with paving the streets with gold, running trillion dollar trade deficits, not addressing medicare and social security, or fighting a $1 Trillion war to nowhere.
Bottom line - we as a society cannot afford to run our society without tax revenue. This giveaway, this big wet kiss to the Real Estate Industrial Complex exacted in the 1990's by Congress, is just silly. And such a shame. Americans should pay taxes, especially on windfall gains.
I sold my house and took my nice $130,000 cash gain gladly, and you don't see me sending in 15% of that to the government. But it frankly feels like stealing.
Because it is.
But alas, this may be a moot point now, with folks buying a house for $800,000 and selling for $250,000.
April 13, 2006
Happy April 15th this weekend. Anyone else see a problem with tax-free windfalls on housing sales?
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34 comments:
Keith - that is idiotic....
You are advocating that we pay MORE in taxes than we already are?
I think all taxes should be based on value like property taxes. The person sitting on a billion dollars sure needs national defense more than the guy with $20 in savings.
I think our $8,411,871,476,467.36 national debt is a bit more idiotic than taxing real estate profits!
All taxation is extortion.
you are a shithead.
"Americans should pay taxes, especially on windfall gains"
a true bitter liberal. I should not pay taxes on gains when I am taking RISK with after tax money. You are a socialist tool.
Keith,
You have finally lost it.
Homeowners are protected by this capital gains tax shelter for a reason.
These are people that are raising families, working for a living, paying income/property/sales taxes -- basically contributing to society.
That is why they're tax-favored.
That being said, perhaps the law can be changed slightly. The "live in 2 of the last 5 years" rule could be lengthened. Maybe keep the no tax if you have owned and lived in your home for 10 years or more.
And by the way, I would support Ben Stein's idea to have a 10% surcharge tax on the rich to support our military.
What about capital losses on a housing sale? Doesn't the tax problem get worse if everyone can take a tax writedown on a loss?
Anon
what's so different now than 10 years ago, when these windfall gains were taxed?
greed. denial. and a "if it feels good, do it" mentality.
Here's my tax policy:
1) abolish all income taxes, period.
2) abolish the IRS
3) abolish the cap gains tax
4) abolish all corporate taxes
5) Establish a national sales (or value added) tax on all consumption to replace 1 through 4
There's so much cheating on taxes in America today, that many pay no taxes (know any bartenders, strippers or drug dealers?)
The tax code is out of control, unbearable and inefficient.
So get rid of it - and tax consumption.
Bad news for tax accountants. Bad news for IRS agents. Great news for you - no more taxes - think about it.
But you'll still consume, maybe even more.
It's time for a change. This selective taxation, where we pay no cap gains on home sales and real cap gains on stock sales, is pathetic. And a system where honest folks pay taxes and dishonest folks don't is pathetic.
Have at it.
much better, you put down the crack pipe it seems.
I heard more people are paying taxes on sale of homes because of run up in values and AMT.
But you are right, all the seniors celebrating their lower drug bills are really only making their grandchildren's future much more shaky.
As for a loss on sale, if you lose your house in foreclosure, the amount bank's loss on your loan is considered income to you. Debt foregiveness is taxable. Ouch.
the same guy who isn't reporting income tax isn't going to report sales tax either. The five dollars plus $1.50 in tax is going straight into his pocket. Sales tax is just giving the tax cheat a pay raise.
it's incredibly easy to catch retailers cheating on sales tax. they won't do it.
a side note for any accountants out there - if I lose $100,000 on a home sale, can I carryforward the losses - $2500 a year, for 40 years? What is the tax treatment on home sale loss?
Hello 2006! High inflation= higher taxes and less money to live on!
I am a retailer and simply refuse to cheat on sales tax. Customers however are very willing to have me eat it or risk loosing all.
I agree with Keith. National sales tax is the way to go. Would put me out of a job (I'm a tax CPA) but there are plenty of things for accountants to do, taxes are just one of them.
Not to go back to the immigration debate, but that is my problem with the illegals - THEY DONT PAY TAXES! If we had a national sales tax that problem would be solved.
As for everyone's precious mortgage interest deduction - don't you think the seller of the home knows you can take that deduction? So the entire industry prices their product artifically high because they know the consumer will get a discount from uncle sam over the life of the loan. And you have the opportunity cost of foregoing your standard deduction, so you are actually worse off buying a house and itemizing your deductions.
The 2 year rule is crazy - why should the taxpayers continue to subsidize the real estate industry? I like the suggestion about increasing the 2 years to 5 years. Would cut out a lot of volitility.
I am a retailer.Retaiers need to be compensated for their time to collect a national sales tax. It is not fair to expect the retail sales community to do the nations bookeeping!
I leave myself wiggle room - either a national sales tax collected a retail, or a built-in value added tax throughout the supply chain
6 of 1 or half dozen of the other
and the point on illegals - exactly right. ding.
hey anonymous retailer,
Are you kidding???
Total sales in dollars * national sales tax rate = total taxes owed.
Simple math. And you collect the money at each sale. And you've been doing the same thing with state sales taxes all along.
Whatever.
Consumption Tax>>YES!!
Income Tax>>>>GET RID OF IT!!
"But it frankly feels like stealing.
Because it is."
Taxes are the government STEALING from me. If I eanred it, they have no right to take it from me. I only pay because they coerce me with threats of prison...
Silly Liberal!!
"you are a shithead"
"silly liberal"
Great arguments there. You're doing wonderful jobs of advancing your causes.
Now, if you want to read an argument written by someone with a brain, have a look see at this:
http://www.house.gov/paul/tst/tst2006/tst041006.htm
The gov't should fund itself like a charity-100% voluntary contributions.
No one has a right to your money.
When Hillary is President the tax rates will go to European levels.
Will it be time to start shooting the bastards then?
Well, actually its not stealing to keep your money. What is stealing is when they take your money again and again and again...in whatever way then can, on the rough materials, when its a finished good, when you buy it, when you use it to make money, etc.
Simmsayss...
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
Keith your getting further and further away from reality.....the gov't should tax real estate gains....wow...you are supporting more taxation as if 40% on the dollar in california isn't enough. Unbelievable, you need to rethink your thinking. That guy was right who said you want to tax individuals for taxing risks with their after-tax money....come on man...think about it.
Kieth if you don't buy a house with the money you sold your condo for. YOU DO PAY TAXES.
So how long are you gonna be in London?
Shame to see you pay 20% taxes on your profts. Only to see housing go up 10%. Couldn't happen to a nicer raciest.
Anonymous said...
Hey anonymous retailer,
Are you kidding???
Total sales in dollars * national sales tax rate = total taxes owed.
Simple math. And you collect the money at each sale. And you've been doing the same thing with state sales taxes all along.
Whatever.
Thursday, April 13, 2006 1:18:53 PM
Dear Sir or Madam,
Collecting and paying sales tax as I have done all along is no easy chore. It requires bookkeeping to track retail and resale purchases and sales as well as different tax rates for every county. It also requires that the retailer be responsible for the money for the quarter while it is being collected. It is not as easy as you assume. Consumers will want retailers to cheat on the tax putting them in a bad position. It is typical for a customer using cash to insist the retailer does not collect tax or risk loosing the sale. I believe hidden costs would be passed on to consumers to offset the liability and expense of being a custodian of the nation’s revenue. This has been my experience with the sales tax. I do sympathize with you but disagree as I cannot imagine any government tax collection system as being as simple as 1+1=2
Keith, you cannot deduct a capital loss on your primary residence. It is very clearly stated in almost those words in the "Selling Your House" publication. It is probably different for rental property.
dogcrap_green is incorrect re the necessity of buying a new house with proceeds from the sale of your primary residence to avoid capital gains taxes. That was the old law.
dogcrap_green is incorrect re the necessity of buying a new house with proceeds from the sale of your primary residence to avoid capital gains taxes. That was the old law.
Lots of folks got caught with their pants down on this one by assuming the old law was still in place.
Lengthening the period to 5 years sound reasonable. And perhaps cap the exclusion at around $500,000.
But on the whole I don't mind real estate gains being nontaxable. After all, you have to pay property taxes (there are none on stocks and bonds) and maintain it.
Yeah, you can itemize property taxes -- but not maintenance. And if you have most of your house paid off, it may not be worth itemizing the property taxes...
All of you national sales tax (aka FAIR tax) advocates seem to be missing one fundamental consideration. Whenever a tax is levied on something, it generally reduces the amount produced or consumed. A national sales tax on goods and services is a consumption tax, and it _will_ reduce consumption spending.
This approach to taxation might have been a good idea 25 years ago when our economy still had manufacturing jobs. But in 2006, over 70% of GDP depends on consumption, and a tax that reduces marginal consumption will send us into a recession or depression.
I would be happy to support capital gains tax on real estate - if they agree to stop the feudal property tax.
I pay enough in property taxes thank you.
You're a communist, Keith.
I was considering to bookmark you blog, but you just had do come forward with all that you really are!
I am glad you did.
Not paying taxes feels like theft to you? Is it government that bought and maintained the house with money that the government made? You think a definition of real american is a payment of tax to the government?
You're obviously dreaming about being a slave somewhere in Soviet Union. Do you wear women's clothes while home alone too? Have you lost your balls and brains?
There are very few things that could be supported by taxes: Millitary (not invasionist), and Justice system, Court, Congress and Coinage. Everything else can and should be paid for privately, only by those using it, and if forcefully taxed for, then is socialist as you are. Are you british? You sound like a british scoundrell. Thanks god founding fathers weren't girly like you.
I don't want to go ad hominem, but there is nothing else to ad to this very simple theme, except to say that you showed yourself to be a complete communist, subservant moron.
Thank you very much. How you are going to compensate me for the time wasted on your blog?
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