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Platinum Trusted Contributor
tjh
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Registered: ‎01-09-2010
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Re: Property tax rates in Ca vs US


OneTreeHill wrote:

And what's wrong with that?  The people who've lived in PA for 30-40 years have had their time to enjoy PA.  Now give others a chance to enjoy PA, too!


Priceless!  Just, unbelievable.

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returningson
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Re: Property tax rates in Ca vs US


elt1 wrote:
RBA ..see burbedcom....PA,LA,LAH,CU and other SV cities with an API over 900.. Fed tax is 20% plus 25% on recapturing depreciation. Inflation is the biggest tax...most real estate gains are just from inflation..... Inflation is a Tax and then the capital gains tax is insult on injury.... Plus cap gains in CA are taxed at the 9.3 ordinary income rate....Depending on you tax rate your cap gain on real estate will be 20 + 9.3+ any depreciation recapture ...total somewhere 25- 35% on an inflated long term asset...almost as high as pure ordinary income tax...

Well not exactly.  

 

Last time I checked the federal cap gains tax was still 15% (although Obama has proposed raising it back to 20%).  You can't count depreciation recapture as part of the tax on capital gains because that same depreciation (which only applies to a business investment like a rental property) allowed the investor to shelter income at his/her ordinary income tax rate.  For a high income investor 25% is a bargain rate.  Finally, you are right about the state taxing cap gains as if it were ordinary income.  Every state that I know of does the same thing.  This is why I am thinking of establishing residence in Washington State (no income tax there)  just before I sell my condo in Canada.  It will be bad enough paying Canadian capital gains tax and maybe taxes in the US as well (foreign tax credits cannot always be fully applied under the convoluted IRS rules).

 

The current capital gains tax on real estate is still a huge advantage.

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returningson
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Re: Property tax rates in Ca vs US

$500K is only for married couples.  Single people only get to shelter $250K.  In California in doesn't take more than a few years of price appreciation to eat up $250K - or even $500K on an expensive property.  

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tjh
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Re: Property tax rates in Ca vs US


returningson wrote:

$500K is only for married couples.  Single people only get to shelter $250K.  In California in doesn't take more than a few years of price appreciation to eat up $250K - or even $500K on an expensive property.  


Could you point me in the direction of a couple of those.  Single or married, I'd like to take advantage of that investment right away! :smileyvery-happy:

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returningson
Posts: 349
Registered: ‎02-24-2012

Re: Property tax rates in Ca vs US


tjh wrote:

OneTreeHill wrote:

BTW, some of the richest people in the world (e.g., Warren Buffet, Bill Gates, etc.) are pleading for the government to raise their taxes.  Does that mean they feel entitled to other people's money?

 

 

 

Yes.  And there is nothing in the world that stops them from self assessing.  They can contribute any amount they wish to the U.S. Treasury.  This option has been around since at least 1843.

 

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782

 

And, they can leave their entire multi billion dollar estates to the U.S. Treasury as well.  There is no prohibition from doing so.

 

But, you'll notice that they aren't exercising that right.  They aren't putting their money where their mouth is, literally.  They have set up charitable remainder trusts instead, to fund non-profit enterprises that they believe in.  Which should tell us all something very clearly:  They trust their own judgments and desires more than they do the U.S. Government.  They wish to remain in control.

 

So why would they make such statements about increasing their taxes?  Because they really want to increase everyone's taxes and then direct how the money will be used.  It's just part of human nature.  We all want to control things in the way we believe is best and it's much easier if we can extract the economic capital to do so from others.  Wrap it in good intentions and altruism all you want but it comes down to self interest in the end.

 

Government may be a necessary evil.  But the nanny state is not!  I'll render unto Ceasar what is Ceasar's but I control my own savings beyond that thank you.  And may do as you please with yours.  The address for your generous and much appreciated contribution to our great nation is provided above.

 


The self-assessment argument is total BS.  It's a polemic trick to defend selfishness and greed.  

 

We live in society that has (or should have) higher-order priorities than simply providing a vehicle for people to get rich while the disadvantaged suffer.  There is such a thing as fairness, which starts with providing everyone with a equal opportunity to be successful, or at least content with their situation.  That requires government intervention because a capitalistic society will not achieve this on its own.  Capitalism is a great engine for economic growth and wealth accumulation but it also concentrates that wealth in the hands of the few.  Warren Buffet knows this and is simply advocating what is needed to achieve and sustain a just society.  

 

Do you really want to live in a banana republic?  Actually, you already do.  Much of the Bay Area, particularly Silicon Valley, is just about there as far as being a society of haves and have nots.   

 

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returningson
Posts: 349
Registered: ‎02-24-2012

Re: Property tax rates in Ca vs US


tjh wrote:

returningson wrote:

$500K is only for married couples.  Single people only get to shelter $250K.  In California in doesn't take more than a few years of price appreciation to eat up $250K - or even $500K on an expensive property.  


Could you point me in the direction of a couple of those.  Single or married, I'd like to take advantage of that investment right away! :smileyvery-happy:


Yes.  Buy right now in a good area.  This looks like the bottom of the real estate market.  The economy is turning around as evidenced by the stock market gains (a leading indicator of the economy), unemployment going down steadily, etc.   

 

I predict that as soon as people can get jobs in the Bay Area real estate prices will skyrocket just the way they always have during times of prosperity.  

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El_Katz
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Re: Property tax rates in Ca vs US


returningson wrote:  Warren Buffet knows this and is simply advocating what is needed to achieve and sustain a just society.  

  

 


Warren Buffet? Ooops.

 

http://www.insidecounsel.com/2012/03/12/irs-sues-warren-buffets-netjets-inc-for-3663-milli

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returningson
Posts: 349
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Re: Property tax rates in Ca vs US


returningson wrote:

tjh wrote:

returningson wrote:

$500K is only for married couples.  Single people only get to shelter $250K.  In California in doesn't take more than a few years of price appreciation to eat up $250K - or even $500K on an expensive property.  


Could you point me in the direction of a couple of those.  Single or married, I'd like to take advantage of that investment right away! :smileyvery-happy:


Yes.  Buy right now in a good area.  This looks like the bottom of the real estate market.  The economy is turning around as evidenced by the stock market gains (a leading indicator of the economy), unemployment going down steadily, etc.   

 

I predict that as soon as people can get jobs in the Bay Area real estate prices will skyrocket just the way they always have during times of prosperity.  


I responded to quickly.  

 

I am not sure that one can find an INVESTMENT property that will return a great return today.  I was actually thinking in terms of buying a personal residence.  Looking a properties just in San Francisco and Sausalito it's clear that you have to pay close to $1 million for anything acceptable.  A property that expensive will not take many years to appreciate by $250K or even $500K.  Unless you are prepared to move each time your home approaches that threshold value you will overrun the tax-sheltered amount and be subject to taxation of the excess.   elt1 is right; capital gains should be indexed to inflation.  

 

Canada does not tax the gains on personal residences, which I think is a great idea.  However Canada also does not allow the homeowner to deduct the property taxes or mortgage interest on a personal residence.  I think that is a good tradeoff and the US should revise the tax code to do the same.  Those deductions are costing the US Treasury several hundred billion each year.  More importantly, they totally distort the housing market by incenting people to buy more housing than they need, which drives up home prices.  At the same time these deductions also reward high income people more than low income people, who often don't even itemize their deductions or rent.   

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mediaguru
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Re: Property tax rates in Ca vs US

[ Edited ]

OneTreeHill wrote:

  Maybe property tax should be based upon one's net worth instead of the value of one's property?  That would prevent old poor people from being kicked out of their homes, wouldn't it?  I mean if you can afford to pay the higher tax, why should you be entitled to such a huge discount?  That's like making people below the poverty line pay a 90% income tax while allowing billionaires to pay only a 10% rate.  BTW, how do you know I'm not old and rich?

Maryland is currently considering such a thing (at least in Baltimore -- they have a state cap there, at 10%, and then also a county by county adjustment, as low as 4%.  Nothing as ridiculous as Prop 13)... they are looking into a progressive cap that is determined both by CPI and by your income/wealth level, NOT a flat annual cap

 

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OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010

Re: Property tax rates in Ca vs US


returningson wrote:

Canada does not tax the gains on personal residences, which I think is a great idea.  However Canada also does not allow the homeowner to deduct the property taxes or mortgage interest on a personal residence.  I think that is a good tradeoff and the US should revise the tax code to do the same.  Those deductions are costing the US Treasury several hundred billion each year.  More importantly, they totally distort the housing market by incenting people to buy more housing than they need, which drives up home prices.  At the same time these deductions also reward high income people more than low income people, who often don't even itemize their deductions or rent.   


Bingo!  The average renter has a lower net worth than the average homeowner, yet it's the richer homeowners that can deduct their mortgage interest and property taxes while the poorer renters cannot deduct their rents.  How distorted is that?  It should be the other way around, shouldn't it?