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With just a "slight" difference in that you do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) when you sell it

With just a "slight" difference in that you do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) when you sell it and you are paying HEFTY property taxes on your current home worth each and every year. Very poor analogy...

JumpCrisscross 2y ago
> and you are paying HEFTY property taxes on your current home worth each and every year Is there any jurisdiction where the assessed value of a home is anywhere close to its market value? (You're still correct. But OP's observation, that this is the stock equivalent of a reverse mortgage, is moreso.)
- bdangubic 2y ago
  I have a rental condo in DC and a house in Northern VA, both are assessed within 10% of what the current market value, DC condo slightly over-assessed, house in Northern VA slightly under-assessed
- cperciva 2y ago
  Pretty close in British Columbia. When you adjust for month to month shifts in the market (aka everyone's homes have appreciated X% since the last annual property tax assessment) the vast majority of sales occur within 5% of the adjusted assessed value. (And many of the ones which aren't within that range are wildly different because e.g. the property assessment was on an empty lot and the property is now being sold with a house on it.)
pwg 2y ago
> do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) Absent a few exceptions, at least in the US you very much do have to pay capitol gains on the increase in value of your house when you sell it. And those exceptions typically amount to a deferral of the tax rather than a "tax free" gain. The one sure way to not pay capital gains on one's house is to hold it until you die, and then your heirs get the 'step-up' basis and they don't have to pay tax on your gains, but will have to pay tax on the gain they accrue while they hold it.
- bdangubic 2y ago
  Yea, you do if you make over 250k in profit but you can roll that over with 1031. Still cannot see how home equity can be compared to borrowing against securities - there are a TON of taxes that we pay for owning a home and none for owning a security...
  - pwg 2y ago
    > Still cannot see how home equity can be compared to borrowing against securities Home equity: borrow money with the home used as collateral - if you default on the loan the bank takes your house to make themselves whole again. Borrow against securities: borrow money with the securities used as collateral - if you default on the loan the bank takes your securities to make themselves whole again. The fact that the house also comes with an attached "ownership tax" that the securities do not include does not change the fact that it is the exact same type of "borrowing".
    - bdangubic 2y ago
      I would agree with this statement 100% if I was also hiding from the government the fact that I own a home when they came to collect property taxes. Since I am not this argument does not hold water.
gruez 2y ago
>With just a "slight" difference in that you do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) when you sell it ...only up to 250k if you're in the US. https://www.irs.gov/taxtopics/tc701 https://www.irs.gov/taxtopics/tc701
- bdangubic 2y ago
  There's ways around that through 1031 exchange but yea, only first 250k come home free. my argument still stands though that comparing HELOC to borrowing against stock is a poor analogy
  - pwg 2y ago
    > There's ways around that through 1031 exchange Only if the properties are both used for "trade, business or investment" (https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031 https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_...). Since your primary residence is not classified as "investment" by the IRS, you can't use a 1031 exchange to defer gains on your primary residence. And a 1031 is a deferral (see cite above), not a "tax free" swap. If you eventually sell without going through yet another 1031 exchange, all the deferred gains become taxable at that point.
    - bdangubic 2y ago
      > you can't use a 1031 exchange to defer gains on your primary residence who says it would be my primary residence when I am about to sell... you never sell your primary residence unless it is an emergency, you move first and make it an investment property and then sell and roll over ... > If you eventually sell without going through yet another 1031 exchange You don't of course ever do that. And all this should be in a trust of course...
- cperciva 2y ago
  Is that 250k over your lifetime or 250k per sale? Can you sell your house back and forth to your spouse every year to multiply the exemption?
tirant 2y ago
In the same way you are also paying corporate taxes in the stocks you own…

JumpCrisscross 2y ago

> and you are paying HEFTY property taxes on your current home worth each and every year Is there any jurisdiction where the assessed value of a home is anywhere close to its market value? (You're still correct. But OP's observation, that this is the stock equivalent of a reverse mortgage, is moreso.)

bdangubic 2y ago
I have a rental condo in DC and a house in Northern VA, both are assessed within 10% of what the current market value, DC condo slightly over-assessed, house in Northern VA slightly under-assessed
cperciva 2y ago
Pretty close in British Columbia. When you adjust for month to month shifts in the market (aka everyone's homes have appreciated X% since the last annual property tax assessment) the vast majority of sales occur within 5% of the adjusted assessed value. (And many of the ones which aren't within that range are wildly different because e.g. the property assessment was on an empty lot and the property is now being sold with a house on it.)

pwg 2y ago

> do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) Absent a few exceptions, at least in the US you very much do have to pay capitol gains on the increase in value of your house when you sell it. And those exceptions typically amount to a deferral of the tax rather than a "tax free" gain. The one sure way to not pay capital gains on one's house is to hold it until you die, and then your heirs get the 'step-up' basis and they don't have to pay tax on your gains, but will have to pay tax on the gain they accrue while they hold it.

bdangubic 2y ago
Yea, you do if you make over 250k in profit but you can roll that over with 1031. Still cannot see how home equity can be compared to borrowing against securities - there are a TON of taxes that we pay for owning a home and none for owning a security...
- pwg 2y ago
  > Still cannot see how home equity can be compared to borrowing against securities Home equity: borrow money with the home used as collateral - if you default on the loan the bank takes your house to make themselves whole again. Borrow against securities: borrow money with the securities used as collateral - if you default on the loan the bank takes your securities to make themselves whole again. The fact that the house also comes with an attached "ownership tax" that the securities do not include does not change the fact that it is the exact same type of "borrowing".
  - bdangubic 2y ago
    I would agree with this statement 100% if I was also hiding from the government the fact that I own a home when they came to collect property taxes. Since I am not this argument does not hold water.

gruez 2y ago

>With just a "slight" difference in that you do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) when you sell it ...only up to 250k if you're in the US. https://www.irs.gov/taxtopics/tc701 https://www.irs.gov/taxtopics/tc701

bdangubic 2y ago
There's ways around that through 1031 exchange but yea, only first 250k come home free. my argument still stands though that comparing HELOC to borrowing against stock is a poor analogy
- pwg 2y ago
  > There's ways around that through 1031 exchange Only if the properties are both used for "trade, business or investment" (https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031 https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_...). Since your primary residence is not classified as "investment" by the IRS, you can't use a 1031 exchange to defer gains on your primary residence. And a 1031 is a deferral (see cite above), not a "tax free" swap. If you eventually sell without going through yet another 1031 exchange, all the deferred gains become taxable at that point.
  - bdangubic 2y ago
    > you can't use a 1031 exchange to defer gains on your primary residence who says it would be my primary residence when I am about to sell... you never sell your primary residence unless it is an emergency, you move first and make it an investment property and then sell and roll over ... > If you eventually sell without going through yet another 1031 exchange You don't of course ever do that. And all this should be in a trust of course...
cperciva 2y ago
Is that 250k over your lifetime or 250k per sale? Can you sell your house back and forth to your spouse every year to multiply the exemption?

tirant 2y ago

In the same way you are also paying corporate taxes in the stocks you own…