Just when you thought it was safe to sell your home again, along comes our cash-strapped state government to mess things up!
Gov. Deval Patrick's bevy of proposed tax hikes includes plans to tax whatever gains home sellers manage to eke out in a real estate market just starting to turn around.
The governor's proposed state budget includes plans to forced home sellers to cough up more than $239 million with a 6.25 percent tax on home-sale gains.
That could mean a tax hit of $4,256 for the average seller. And that number could top $30,000 for a married couple who sells their home after accruing decades of gains worth a half a million or more.
In fact, fair or not, the proposal has already earned the governor a rather unfortunate nickname on the comment board of this blog - "Governor Devalue."
Currently, sellers are spared paying taxes on up to $250,000 in gains from the sale of a house, a number that rises to $500,000 for a married couple filing jointly.
Here are two big ways Patrick's bid to squeeze money out of middle-class home sellers could backfire and backfire big time at that. Here's a link to my weekly Banker & Tradesman column, where I cover it all in even more detail.
First, it could make scare off home sellers, who happen to be increasingly scarce commodity in the current real estate market.
While there are more than enough buyers out there right now, the number of homes listed for sale plunged by a quarter last year, with more of the same so far in 2013.
Faced with a potential tax hit, some would-be home sellers, especially those whose property values are just starting to move from the red back into the black, may be motivated to sit things out a while longer.
Second, Patrick's proposed home sellers' tax could also wind up helping accelerate already rising home prices.
Fewer home sellers will mean even fewer listings for buyers to pick over, sparking even more bidding wars over overpriced and overrated homes.
That's my take? What's yours? Should sellers be forced to fork over some of their gains?
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