President Trump launched on Tuesday the possibility of eliminating federal tax on capital gains on sales of houses, in a decision that would modify the way in which real estate profits are imposed for the first time in 30 years.
Addressing journalists at the oval office on Tuesday, Trump suggested that he was weigning support legislation Presented by the representative Marjorie Taylor Greene de Georgie who would not serve the tax on existing capital gains on sales of houses. Greene called the tax “an obsolete and unfair burden, in particular on the housing market today, where the values have skyrocketed”.
“We are thinking about it,” Trump replied to a journalist, when he was asked how important it is that the capital gains tax is eliminated in order to “free” the housing market. “He would also release it by reducing interest rates,” said the president, adding: “If the Fed would do reduce We wouldn’t even have to do that. But we think of no tax on capital gains on houses. “”
Currently, tax declarants can exclude up to $ 250,000 in capital gains from sales of their main homes from their taxable income under what is called article 121 exclusion. This amount amounts to $ 500,000 for joint declarants. The two amounts have remained fixed since 1997.
Reached to comment CBS Moneywatch, the White House said it had nothing to add to Mr. Trump’s comments.
“The owners who have lived at home for decades, especially the elderly in places where values have increased, should not be forced to remain in place because of an IRS penalty”, Greene said In a statement announcing the law on the sale of home sales offered. “My bill unlocks this capital, helps repair the housing shortage and supports long -term financial security for American families.”
According to research from the National Association of Realtors (NAR), the current federal policy on the tax on capital gains on house sales “quietly distorts the housing market” by locking older owners and strangling stocks just when America needs it most “.
“Trade penalty”
A NC study revealed that 34% of owners, or 29 million Americans, would exceed the threshold of $ 250,000 if they could sell their homes, while 10% or eight million Americans would exceed the $ 500,000 threshold for joint declarants.
Consequently, older owners are disintegrated to sell their houses, in what NAR researchers call a “stay penalty”. For example, the elderly who could otherwise consider getting closer to the family or reducing the workforce, remain in place – and maintain housing stocks.
“This stagnation in the turnover of the housing undulating the entire market, increasing costs and limiting opportunities – exactly the opposite of public policy should be encouraging,” said Shannon McGahn, executive vice -president of NAR and head of advocacy, in a statement. “And it gets worse every month.”
Critics say that the elimination of the tax would only benefit from wealthy Americans who can afford to pay taxes on sales of houses that exceed the limit.
Joel Berner, principal economist at Realtor.com, told CBS Moneywatch that many house sellers already benefit from the exclusion limit of $ 250,000, and that the elimination of capital gains tax would mainly benefit the richer Americans who have residences who appreciated more than $ 250,000, or $ 500,000 in the case of joint statements.
“It wouldn’t really move the needle for an ordinary family, unless you have a house that is very appreciated,” said Berner at CBS Moneywatch. “If your house has appreciated more than a million dollars, there would be an advantage to remove the tax on capital gains.”
Stock version
He also suspects that the elimination of capital gains tax on sales of houses would publish the inventory on the housing market.
“It could be a good thing for the market. Especially where stocks are limited, it could benefit ordinary people,” said Berner.
On the other hand, the elimination of the federal tax would also erase the income paid to the government and could arouse an increase in the interests of Investors and speculatorsThis could also raise the values of the houses. This would contribute to the problem of the affordability of the country’s housing, according to Berner.
Almost 27% of all houses sold in the first three months of the year were purchased by investors – the highest share at least five years, according to a report by the Batchdata real estate data supplier.