patrick.net

O.K, you get NO MID and if you want to sell your home without cap. gains you may do so (after TEN years!)

That, along with no gov backing of low/no down loans, would be the best "Affordable Housing" policy.

>> So, generally “low income” is not a cover-all excuse to not be a saver. It’s more of a mindset, you’re a saver or you’re not, and in the US people are brainwashed to not be savers but they can break out of the brainwashing.

Banks and Government works hand in hand to create anti saving mentality. It is a rational response of masses to NOT TO SAVE. SAVERS ARE LOSERS. Please watch this video:

Money as Debt : Animated Video by Paul Grignon
http://video.google.com/videoplay?docid=-9050474362583451279

That, along with no gov backing of low/no down loans, would be the best “Affordable Housing” policy.

There should be no government backing of ANY loan.

Well, to be truthful there is a certain amount of value in having a VA "assumable" loan. But only b/c it made the transaction smoother.

Well, to be truthful there is a certain amount of value in having a VA “assumable” loan.

VA is different because it is a perk for deserving soldiers.

@Headset,

Exactly. (Like realtors are going to tell first time buyers the "tax benefits" of owning a home aren't already "baked-in" to the price)?

If the market allows zero down loans, I don’t see any problem.

Those of us old enough to have tried to buy houses in the 80's or earlier know the phrase "Nothing Down, Banker's Frown." Without a VA or FHA loan, you had to cough up 20% down for a owner occupied home and 50% for an investment property. Plus, the banks wanted you to state the source of the down payment and would not allow the downpayment to be borrowed. I do not think the market will support zero down without gov backing. Often enough, gov backing just raised prices and planted the seeds of future forclosures.

How about un-deserving sailors?

I had a Division Officer that swore I "had my OWN Navy" (as clearly I wasn't part of their's) :)

Un-deserving sailors should be made to scrub the decks. :)

Exactly. (Like realtors are going to tell first time buyers the “tax benefits” of owning a home aren’t already “baked-in” to the price)?

Even worse. For many first time buyers in "fly over land" the MID did not quit add up to the Standard Deduction.

Underserving sailors? I can think of many things sailors deserve. None printable.

it was very difficult to explain to my fatherinlaw that one of the reasons we didn't want to buy a bigger house in a more expensive area was that the much higher property tax wasn't deductible because in my situation I have to pay AMT.

-He didn't know what AMT was
-He didn't believe me
-He thinks I'm an idiot

So not only do most people think they are increasing their tax deductions by paying interest, they also assume all the taxes are deductible, no matter their amt situation!

NOT INVESTMENT or TAX ADVICE! I AM NOT A PROFESSIONAL FINANCE PERSON!!

revenge,

Outstanding! I'm o.k w/ the first 2 but #3 gets my goat. And I suppose deductions fade out above ____ anyway? Not to "one better" you but you'd be surprised how many Oregonians honestly believe that by paying more in property tax they're somehow getting over on the fed's.

It would be funny if it wasn't so, so.. stupid.

Banknotes, when they are printed, are considered the property of the Central Bank. They are not given to the State to spend, but are brought into circulation against a corresponding debt. Anyone wanting some of those notes to spend, has to "buy" them by giving up some of their credit. And in any case, most of the money in circulation (more than 90%) is not banknotes but "credit".

When you go to your bank asking for money, the loan you get is created right there in your bank. The "money" consists of figures on your bank account, and it can be spent writing checks, giving an order to transfer or drawing the cash. Banks only have to have a small percentage of their loaned-out money actually available. The rest can be paid out just by moving some figures from one account to another. The important thing to know: Money is created just by inserting some numbers into a computer.

I am hoping for deflation caused by the credit contraction.
CR just had a post noting that writedowns hit $100 billion. It is rather hard to comprehend that this amount of money has been vaporized. Interesting to note that the "stimulus" is around this amount...

Hey, revengeofaone, have some sympathy for the guy. Remember the first time some told you that there are two different tax codes, you have to do your taxes twice, and pay the higher of the two amounts. It was kinda like, you're joking right.... and then, uhhh, does this mean my refund is in jeopardy?

@DinOr, you'll like this one. At socketsite there is a commercial landlord who wants to get out of the business. The plan is to 1031 exchange into SFH rentals, then live in each serially for two years to claim The Exemption. Nice way to aviod cap. gains and CA taxes...

AND... we live in a society where abusing the tax code is OBVIOUSLY a non-issue! (At least where this is concerned) I may have mentioned I spoke w/ one of the economists in the capitol and he said there are rumblings in DC regarding this brand of BS.

MAN UP people!

I mean what would possess a person to think this was acceptable to the degree it could be openly discussed like that in public? I guess this is like getting busted for smoking a joint at Woodstock huh?

Interesting plan EB, I suspect that the gains earned in 1031s don't disappear, otherwise everyone would do it. If I am wrong then it is a brilliant plan except for the one main reason that I didn't do 1031s. If you want to get out of a declining market it is a poor strategy to trade one asset for another.

It wasn't fun paying on the gains but the rate was so low that I've already made back all the taxes just by paying off my current home, and I earn 10% on the money through my investment. Basically after 2 and a half years you've made the money back if you do it right, look at what your friend has to go through just to avoid the tax. Not worth it in my opinion.

We must eliminate the capital gains tax. It is distorting the market.

Believe it or not, I believe the capital gains tax is one of the fairest taxes if you must have taxes.

Pot house on sale?
37168 Aleppo Dr, Union City, CA
http://sfbay.craigslist.org/eby/rfs/543089925.html
Property owner is Yile Xu
A search with that name comes up with these news
http://www.themoneyblogs.com/socalbubble/my.blog/cali-real-estate-agents-love-their-pot-houses.html
http://www.news10.net/display_story.aspx?storyid=24195

It works kind of like an IRA if you think about it.

Believe it or not, I believe the capital gains tax is one of the fairest taxes if you must have taxes.

Huh?

I think sales tax is the fairest tax.

Can someone get my 12:21 out of moderation please?

Of course you would. That is one of the most regressive taxes. It is a horrible burden on the poor.

Of course you would. That is one of the most regressive taxes. It is a horrible burden on the poor.

We do not charge sales tax to many essential items (like food and rent) anyway. I do not know how it is a burden on the poor.

On the other hand, many well-to-do families spend 100%+ of their incomes.

Well, the only wrinkle in the plan (according to another poster) is that to claim The Expemption for 1031 exchanges, you MUST hold for five years (but only need to live in for two years to claim the expemption). Also, you must show "intent" when buying the house as part of the 1031 exchange; most advisors recommend renting it out for at least two years. All this is should be legal (but don't quote me on that!). And one more thing, this strategy avoids cap. gains and state taxes, but you still need to pay the depreciation recapture.

but you still need to pay the depreciation recapture.

Not if you keep 1031-ing.

EBGuy Says:

> @DinOr, you’ll like this one. At socketsite there is a
> commercial landlord who wants to get out of the business.
> The plan is to 1031 exchange into SFH rentals, then live
> in each serially for two years to claim The Exemption.
> Nice way to avoid cap. gains and CA taxes…

This will work and is completely legal (if he actually lives in each property for two years), but it will probably not save him much money (even if home prices stay constant). If he had a $3mm commercial property and bought 6 $500K homes he would have a huge amount of negative cash flow over the next 12 years.

I know of about a dozen families that have sold rental homes telling the IRS that they lived in them to get the $500K tax free, but I only know one family that “actually” lived in the rental for two years (and I did have one friend who got to “rent” a big home in Atherton from his parents for 18 months since they wanted to keep their home (where my friend grew up) in West Menlo as a rental and sell a crappy rental home in Redwood City doing a 1031 exchange to buy the Atherton home).

This will work and is completely legal (if he actually lives in each property for two years), but it will probably not save him much money (even if home prices stay constant).

Perhaps people just HATE tax so much they will pay anyone but the IRS.

But why won't they support Ron Paul?

Believe it or not, I believe the capital gains tax is one of the fairest taxes if you must have taxes.

Possibly. But one thing to consider is that it becomes an inflation tax if applied to an owner occupied home (I am assuming you mean the tax itself, not the 20% rule). If one must relocate and thus sell his $250k home and purchase another $250k home, it would be unfair to hit him with a cap gain tax just because he only paid $180k for the original home 7 years ago. He stilll must buy at today's prices, thus no real gain.

but you still need to pay the depreciation recapture.

I believe the plan was:
1. "1031" 5 smaller rentals into one big rental
2. Rent out the big house for two years
3 Boot the tenants and move in. (This will trigger the recoup dep.)

Perhaps people just HATE tax so much they will pay anyone but the IRS.

But why won’t they support Ron Paul?

Because people don't want to pay tax, but they want to benefit from other peoples taxes. Ron Paul would lower taxes and corporate/personal welfare.

Administrator Says:
One more bit on medical costs (should I start a medical cost blog?)

A medical costs blog sounds like a good idea.

However, one thing I was thinking of requesting from you was a place where we can collect quotes and predictions (with dates) from L. Yun and LAY, maybe even Kudlow and Cramer.

For now, just a tabular chronological form would be sufficient. Later on, you can use them to annotate a graph of the market to show exactly how misleading their statements were.

Idea for what to do with the $800 Bush sends you this spring:

BUY 1 GOLD EAGLE.

What if everyone in the USA did just that???

Unfortunately by that time you will probably need to keep in a few hundred more USD.

These cap gains games really PO me personally. I actuall lived in my SJ home for 25 years, then got stuck paying cap gains on the amount over $250K because I'm one of those dirty disgusting single people. Whereas a married couple could "play the game" in 2 years and skate tax free up to $500K.

keep = kick

Peter P Says:
January 18th, 2008 at 3:48 pm
"We do not charge sales tax to many essential items (like food and rent) anyway. I do not know how it is a burden on the poor."

Not true, that is the case in CA, many states charge sales tax on everything. There's also no way you can tell me that sales tax amounts to a higher percentage of a poor person's income. Who cares about your point that it isn't charged on food? If a poor person buys a laptop for school they have to pay the same as I would. Rich people don't spend 100% of their incomes, that's why they're rich, you're confusing rich people with the pretend to be rich people.

ex-sunnyvale-renter Says:
Now, USA is like old USSR - only worse

Absolutely wrong. I was there in '74 and '86. It was _nothing_ like the USA. Don't be ridiculous.