Tax Code

[Gaulkin]

So there talking about changing the tax code that does not tax you on capital gains on holding a home for more then 2 years up to 500,000 joint and 250,000 if your single. I find this rather odd because it gives you incentive to pay your mortgage. What are your thoughts on this?

[JLeezer]

I'm kind of surprised no one else has replied to this yet.

I haven't heard anything about this, so forgive me for beginning my answer with questions.

Who is discussing this change? Is it being initiated by the president, congress, or internal to the IRS? Also, any idea of the proposed effective date of the change? Have you heard if it will be a temporary change that expires in a set amount of time (assuming it is not renewed)?

The answers to the last two questions could change the effect a new law would have on the economy. The answer to the first question could determine whether it actually becomes reality or not.

I think that instead of eliminating the tax relief entirely, the length of time that must pass before the homeowner receives the full deduction should be increased. At only 2 years, it is fairly common for house flippers to remodel their home while they have down time from other projects, then flipping it after 2 years of living in it. If the qualification period was 5 years, it would make it more effective for giving longer term homeowners a tax break while preventing people from flipping their own house.

[Gaulkin]

Well they dont have a answer as to what they are going to do, there just throwing around ideas but they want to change it. In theory they say it gives incentive for people to buy houses they cannot afford, but i think there changing the wrong things. Instead of changing the tax they should be changing lending policies that let people buy houses they cannot afford.

Ps. If you get a New York Times from today you can read the article.

[BusinessAdviser]

In theory they say it gives incentive for people to buy houses they cannot afford, but i think there changing the wrong things. Instead of changing the tax they should be changing lending policies that let people buy houses they cannot afford.

Since you are talking about a policy change by the federal government, might it be due to the fact that the government is in charge of the tax code but not in charge of private lenders' policies?

[Gaulkin]

Regardless, they should not punish people who pay there mortgage.

[BusinessAdviser]

Regardless, they should not punish people who pay there mortgage.

Are they punishing people, or just removing an incentive?

[Gaulkin]

The tax isn't the problem, it didn't put us in this credit crisis therefore it should not be changed.

[BusinessAdviser]

Have you considered that the change would help the national debt problem?

[jasaunders]

I didn't realize Bush cared about the national debt. I just assumed he thought money grows on trees.

[3388]

have a look

[3388]

just come to have a look