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Isn't in US some heavy taxation on capital gains from quick property sales to prevent this type of speculation? Ie in France it's progressively lowering after 5

Isn't in US some heavy taxation on capital gains from quick property sales to prevent this type of speculation? Ie in France it's progressively lowering after 5-6 years, it gets down to reasonable levels in I think 22 years. The result is much less volatility on the market.

ojbyrne 8y ago
Short term capital gains are taxed at the same rate as ordinary income. Long term capital gains (greater than 1 year) get taxed at a lower rate.
- djrogers 8y ago
  For homes, you need to have lived in the house as your primary residence for 2 of the past 5 years in order to qualify for long-term capital gains.
  - TomVDB 8y ago
    This is not true at all. You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion. Otherwise the normal short-term/long-term capital gains rules apply. https://www.thebalance.com/sale-of-your-home-3193496 https://www.thebalance.com/sale-of-your-home-3193496
deleted 8y ago
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danielvf 8y ago
There is a long-term capital gains tax break for holding a certain number of years. However with real estate you can sell one property and use the money to buy another within a certain amount of time and not have a taxable event. (See https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips https://www.irs.gov/businesses/small-businesses-self-employe... )
- irq11 8y ago
  So it’s worse than having a policy that is neutral on flipping: our tax system actually encourages it. We shoud tax short term capital gains on property at 100 percent. Nobody should be able to profit by driving up the cost of housing.
  - wutbrodo 8y ago
    I'm surprised to see you downvoted so heavily; I thought HN was generally familiar with Georgism (which I'm pretty much a full-throated supporter of), and what you're suggesting is a softer version of Georgism (limited to short term gains). The principle behind capitalism is that you create value and get a portion of the value thereby created as income/return. Land value appreciation very much doesn't fall into this category, unlike every other investment in which 1) the capital serves an allocative purpose and 2) is being put into productive use by someone else. Land value gains are generally extractive (and destructive, through the inefficiency it introduces) of the wealth created by nearby economic activity. I know someone who bought a bought a house in Beverly Hills in the 70s for $30k: forty years and a ~million dollars of value growth later, they sold it and collected four decades of extraction from the economic activity of the area around them. There's no universe in which this is sensible policy, and as you rightly point out, encouraging it through tax policy is even more insane. I think it's something about homeownership that makes people hyper-defensive about this topic and unable to think clearly. I can't say I relate, given that my dad's career (and an outsize portion of his portfolio) in real estate doesn't prevent me from seeing the issue clearly.
    - mbrumlow 8y ago
      Nobody drove the price up. It was simple supply and demand. If more people want to live in a area -- for whatever reasion -- the amount somebody will play will go up. Why should somebody not be able to take advantage of that? What if they simply wanted to move two streets over? But now could not because the somebody thinks it's unfair that housing prices whent up. But your other points are messy. People in the cominity are building that value over time by being good citizens of the region. Had they been bad citizens nobody would have moved in and continued the process of building the cominity. It also cost a ton of money to keep your house in proper working order with also increases the demand and again raising the value of the proeprty. I have so much more to say but I am replying on a phone and I can't stand it. Phones are horrible. There is no universe where somebody could buy a house for 30k and forty years later be told even though they sold it for millions that they gave to give it all back - and then try to find another house for 30k. God I hope I read your post wrong.
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romed 8y ago
In the US you may exclude up to half a million dollars of gains from your taxable income if you owned and lived in a property for at least two years. Otherwise gains on the sale of real property are taxed as ordinary income.
- ryanwaggoner 8y ago
  If you hold it for longer than a year, long-term capital gains rates apply, which are generally lower than ordinary income rates.
- drewmol 8y ago
  Specifically, 250K for single filers, 500K for married couples. Also, if you're married by Dec 31st, the IRS counts that the same as being married all year in terms of filing status eligibility, so it may pay off to get hitched before you sell and divorce after ;-)
- walshemj 8y ago
  That's harsh in the UK your primary residence is exempt totally.
  - gowld 8y ago
    It's not harsh, it's acknowledging that windfall income is unearned. That half a million exemption (or half that for unmarried people) is in addition to deductions for all depreciation and expenses.
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ojbyrne 8y ago

Short term capital gains are taxed at the same rate as ordinary income. Long term capital gains (greater than 1 year) get taxed at a lower rate.

djrogers 8y ago
For homes, you need to have lived in the house as your primary residence for 2 of the past 5 years in order to qualify for long-term capital gains.
- TomVDB 8y ago
  This is not true at all. You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion. Otherwise the normal short-term/long-term capital gains rules apply. https://www.thebalance.com/sale-of-your-home-3193496 https://www.thebalance.com/sale-of-your-home-3193496

deleted 8y ago

[deleted]

danielvf 8y ago

There is a long-term capital gains tax break for holding a certain number of years. However with real estate you can sell one property and use the money to buy another within a certain amount of time and not have a taxable event. (See https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips https://www.irs.gov/businesses/small-businesses-self-employe... )

irq11 8y ago
So it’s worse than having a policy that is neutral on flipping: our tax system actually encourages it. We shoud tax short term capital gains on property at 100 percent. Nobody should be able to profit by driving up the cost of housing.
- wutbrodo 8y ago
  I'm surprised to see you downvoted so heavily; I thought HN was generally familiar with Georgism (which I'm pretty much a full-throated supporter of), and what you're suggesting is a softer version of Georgism (limited to short term gains). The principle behind capitalism is that you create value and get a portion of the value thereby created as income/return. Land value appreciation very much doesn't fall into this category, unlike every other investment in which 1) the capital serves an allocative purpose and 2) is being put into productive use by someone else. Land value gains are generally extractive (and destructive, through the inefficiency it introduces) of the wealth created by nearby economic activity. I know someone who bought a bought a house in Beverly Hills in the 70s for $30k: forty years and a ~million dollars of value growth later, they sold it and collected four decades of extraction from the economic activity of the area around them. There's no universe in which this is sensible policy, and as you rightly point out, encouraging it through tax policy is even more insane. I think it's something about homeownership that makes people hyper-defensive about this topic and unable to think clearly. I can't say I relate, given that my dad's career (and an outsize portion of his portfolio) in real estate doesn't prevent me from seeing the issue clearly.
  - mbrumlow 8y ago
    Nobody drove the price up. It was simple supply and demand. If more people want to live in a area -- for whatever reasion -- the amount somebody will play will go up. Why should somebody not be able to take advantage of that? What if they simply wanted to move two streets over? But now could not because the somebody thinks it's unfair that housing prices whent up. But your other points are messy. People in the cominity are building that value over time by being good citizens of the region. Had they been bad citizens nobody would have moved in and continued the process of building the cominity. It also cost a ton of money to keep your house in proper working order with also increases the demand and again raising the value of the proeprty. I have so much more to say but I am replying on a phone and I can't stand it. Phones are horrible. There is no universe where somebody could buy a house for 30k and forty years later be told even though they sold it for millions that they gave to give it all back - and then try to find another house for 30k. God I hope I read your post wrong.

deleted 8y ago

[deleted]

romed 8y ago

In the US you may exclude up to half a million dollars of gains from your taxable income if you owned and lived in a property for at least two years. Otherwise gains on the sale of real property are taxed as ordinary income.

ryanwaggoner 8y ago
If you hold it for longer than a year, long-term capital gains rates apply, which are generally lower than ordinary income rates.
drewmol 8y ago
Specifically, 250K for single filers, 500K for married couples. Also, if you're married by Dec 31st, the IRS counts that the same as being married all year in terms of filing status eligibility, so it may pay off to get hitched before you sell and divorce after ;-)
walshemj 8y ago
That's harsh in the UK your primary residence is exempt totally.
- gowld 8y ago
  It's not harsh, it's acknowledging that windfall income is unearned. That half a million exemption (or half that for unmarried people) is in addition to deductions for all depreciation and expenses.

deleted 8y ago

[deleted]