Budget proposal would hit home sellers with higher taxes

Under the government’s proposed budget overhaul, Americans who sell their homes at a profit would be hit with much higher taxes. Although President Obama’s deficit commission failed to get the necessary votes, one proposal is to tax capital gains the same as ordinary income. Previously, sellers were only taxed 15 percent on profits exceeding $500,000.

December 09, 2010

 

Under the government’s proposed budget overhaul, Americans who sell their homes at a profit would be hit with much higher taxes, The Wall Street Journal reported.

Although President Obama’s deficit commission failed to get the necessary votes, one proposal is to tax capital gains the same as ordinary income. Previously, sellers were only taxed 15% on profits exceeding $500,000. But the new proposal would tax them up to 28% on any profits, and this worries industry experts.

“Eliminating the gain exclusion would drive down housing demand, hurt housing prices, and reduce the after-tax wealth of homeowners, particularly older homeowners whose equity in their home they planned to use as part of their retirement,” said Robert Dietz, an economist with the National Association of Home Builders.

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