Quote:
Originally posted by sgtclub
I don't follow this. You think people are discourage from selling their home (at a gain, in most cases) because their new home, if they buy one, will likely have a higher basis?
|
Yes, with the caveat that they likely care about the basis insofar as it affects their property taxes, not any future capital-gains taxes.
Take, for example, a retiree with a larger house and adult children. If s/he's been in the house for a while, it's paid for, and the property taxes are very low. S/he could sell it and move to somewhere smaller, but would then face much greater property taxes. This is a reason to stay.
I've just described my neighbor, per her explanation to me of why she continues to live alone in a 3BR house. Surely there's more too it than that, but it distorts the market to a degree. That house should be on the market so that a family with kids can live in it. She should be moving to a smaller place. And it's absolutely insane that I am subsidizing her public services, etc., by paying property taxes many times greater than hers.
