Business, Economics, and Taxes 2: That's Why We Fight to Take the Means Back

aparch said:

It's actually a decent idea. So good an idea, that my wife and I did that exact thing in 2015 when we bought our house.

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yeah, this has always been a thing? I'm confused.

Deutsche Gopher Fan said:

yeah, this has always been a thing? I'm confused.

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You usually take a decent tax hit when pulling the money out. They could change that for home purchase. I don't know the ramifications of that though. Likely it will make the rich richer and the poor poorer like everything else.

I'd rather they restrict home ownership to a low number of homes. You can go over but if you do you are slammed with high taxes. That would put more supply in play and bring prices down.

Its always been an option, but no one I know would recommend it unless terms are favorable or you arent getting penalized. Plus it depends how long you plan to live in your house...

And considering how bad the job market is not sure a bunch of people cashing in their retirement to buy a house (when prices arent dropping) is a good idea for anyone but the banks. In fact it will just prop up the market and put a lot of people in the position of being house poor. It is one thing to do this when jobs are abundant, the economy is crushing and there is little fear of lost income. But now? Seems like unnecessary risk.

You can have one primary residence and maybe one secondary one provided it is not a source of rental income. The minute it becomes income, or you add 3+ homes, you should get taxed up the wazoo.

ScoobyDoo said:

I'd rather they restrict home ownership to a low number of homes. You can go over but if you do you are slammed with high taxes. That would put more supply in play and bring prices down.

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This is a good idea. Also tax rental income at a higher rate. This would hurt me personally, so what would I probably do? Sell my rental property. And what would that do? Put another house on the market for sale. And what would that do? Bring the median cost of all houses down by say 25 cents.

Now do that a million times.

Handyman said:

Its always been an option, but no one I know would recommend it unless terms are favorable or you arent getting penalized. Plus it depends how long you plan to live in your house...

And considering how bad the job market is not sure a bunch of people cashing in their retirement to buy a house (when prices arent dropping) is a good idea for anyone but the banks. In fact it will just prop up the market and put a lot of people in the position of being house poor. It is one thing to do this when jobs are abundant, the economy is crushing and there is little fear of lost income. But now? Seems like unnecessary risk.

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oh, i never said it should be incentivized, just meant that it was nothing new. i knew a few people who did it, but had the money paid back within a year of taking it

FadeToBlack&Gold said:

You can have one primary residence and maybe one secondary one provided it is not a source of rental income. The minute it becomes income, or you add 3+ homes, you should get taxed up the wazoo.

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Here in MI, you and I get taxed heavily on the 2nd home. Which is why so many people lost their family cabin up north....

MichVandal said:

Here in MI, you and I get taxed heavily on the 2nd home. Which is why so many people lost their family cabin up north....

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I'm talking an income tax, not just the higher local property taxes that you and I get hit with on houses that we don't declare as our homestead. The rich have no problem affording property taxes because they're largely static and as of 1994's Prop A, SEV doesn't automatically uncap upon property transfer in MI if you set up your trusts correctly and your surviving heirs follow the rules (no commercial or rental use).

The families who lost their vacation properties lost them because their kids and grandkids either couldn't afford the taxes as-is, or screwed up the transfer so that SEV became uncapped and they couldn't afford the new taxes, most likely because they didn't get the legal help to do it correctly, or couldn't afford it. This is the situation that I might find myself in very soon when my grandfather passes, because they kept the cabin outside of their trust and never changed it after I became an adult and could legally inherit it (boo-hoo-hoo, I know /sarc).

There's also the fact that many Millennials and Zoomers just do not have much interest in keeping said Up North properties to begin with, even if they could afford it. Younger people want more exotic travel with different cultural experiences, and going to the cabin in northern Michigan for a few weeks every summer to hang with other pasty white people isn't adventurous enough. I do intend to keep ours, if finances allow.