The MTG bill submitted to the House of Representatives sounds like a good way to spur listings and sales in the popular higher-end areas where appreciation has climbed significantly – like California.
But if it doesn’t pass, then we’re all standing around waiting for nothing.
What could be in the way?
- The estimated cost is $6 billion, but Rep. Greene says they can just reduce foreign aid to cover it. There could be some pushback there.
- The Senate has their own super-duper housing bill that just passed in committee but it’s more about zoning changes – there isn’t a mention of eliminating or modifying the capital-gains tax in their bill. Congress might decide to skip anything about capital-gains.
- The other possibility is to approve a modified version. The NAR has suggested in the past a doubling of the exemption amounts ($500,000 to $1,000,000), but those around here who have lived in their home for 20-30+ years have a larger gain than that. They aren’t going to be tempted to move unless they can get it all for free.
- The State of California hasn’t joined in either, and if they don’t, then their 13% tax will throttle the baby boomers too.
Those are too many moving parts to believe a complete tax exemption is coming.
I don’t think there will be a version of the bill that gets passed that will impact the overall market in California – there will be politicians who balk at complete elimination of the tax. It would need to be a full-blown free pass to stimulate the longtimers to get off the couch and finally downsize.
These two tax professionals chime in here:
Yep, grifters aren’t getting my money….holding until we die
That’s it right there!
The alternative is to stay on the couch and do nothing and kids get all the money tax-free.
Any tax reform needs to be for ALL profit to be tax-free otherwise the current program works ok.
I’ve never understood why taxes on selling a house is an arbitrary number like 500k. I dont think there should be a tax at all but if there has to be one it should be something like 2% of each sale.
I can name 5 older couples 80+ right now waiting for the first spouse to die so they can get a step-up in basis and sell. They will downsize and keep the Prop 13 Real Estate Tax basis.
Boomers have it pretty good, don’t we?
What if they did away with the step-up in basis when someone dies? Biden and Hillary were floating that idea. Holy shit Batman!
What if they did away with the step-up in basis when someone dies?
If they deleted that step-up, then the surviving spouse would have a great reason why they AREN’T MOVING ANYWHERE. They didn’t want to move any way!