[sickygnar]

Why is real estate always exempt from this stuff? Is there a good reason or is the special interest just large?

[bestcoder69]

Non-pessimistic answer: it’s largely the only place the middle class parks its wealth. Besides that it would be stuff like 401k and Roth IRA which would also be exempt already.

Pessimistic answer: it’s for developers and landlords

[majormajor]

Yes, if you included real estate at the 250K number, you'd hit a much broader target than you would for stocks. But eliminating real estate entirely is a huge break for rent-seeking large landlords and developers. Probably should've simply chosen a higher dollar threshold for real estate.

[bombcar]

There's a fairness argument that can be made (but probably should only apply to primary residences only) - you buy a house for $100k in Seattle 10 years ago - now you want to move to another neighborhood into an identical house, but both are now worth upwards of $500k - you'd have to come up with the tax difference on the "profit" even though all you're doing is moving between nearly identical properties.

Also stock sales are more easily "structured" to avoid this tax (sell half this year, half next year) whereas a house has to be sold as a "whole".

[lordnacho]

Can't be hard to invent an exemption for that case. When you buy the new house, the tax is deferred, in proportion to the cost. So if you trade down you pay and you will have the money. If you buy a more expensive place there's nothing to pay, but you have a balance. When you die, you pay the balance or your heirs inherit it.

[medvezhenok]

That's exactly what the 1031 exchange is for

[fighterpilot]

That's why we need a land tax instead of a cap gains style tax that applies to transactions.

[LanceH]

Also, in most places there is already a wealth tax on the property itself.

[gimmeThaBeet]

I half agree, there are no doubt interested businesses. I don't know what the breakdown in benefits between people and businesses, but I do agree.

But when you think about housing and capital gains tax benefits at a federal level, specifically related to one's primary residence, I think it's reasonable to say that taxing real estate sales (or at least housing) is not very popular in like, a literal sense. Now obviously people don't usually go selling their home every two years, so it might not be frequently relevant.

I just feel that housing transactions are, I don't know, more in public consciousness, than like selling a mutual fund? That assertion is basically speculation though, i.e. people might more commonly identify more as home owners, than people with large amounts of equities etc.

And I guess part of that is mental, and part financial, in that it seems housing is more frequently the biggest piece of one's total picture than I would guess.

[giantg2]

Not sure if this exempts all real estate. In other areas they often exclude the primary residence. I think it's because for most people, that's their biggest asset and would represent a huge loss of wealth for the lower and middle classes. Especially if they are selling it to move into a retirement home (they'll likely need that money to pay for it too).

[jandrewrogers]

In the specific case of Washington, they have an excise tax on the sale of real estate up to (IIRC) 3% of property value, which is substantial. Taxing the gain and the sale would put quite a significant tax burden on people moving house, particularly in very expensive markets like Seattle where most home sales will be subject to capital gains.

[refurb]

Because housing in WA has gone up like crazy so a ton of residents are sitting on huge capital gains. The feds might exempt $250k of gain, but they’d get hit in WA.

We can’t have people to hit the housing lottery pay a dime of those gains as taxes, can we?

[apex3stoker]

I think if real estate is like stock, most real estate holders will be happier. Real estate is subject to property tax, which is pretty much a form of wealth tax.

[scsilver]

Landowners vote

[spaetzleesser]

I have the same question. For middle class we should exempt a certain amount of money from any investment and treat all capital gains the same. The real estate exemption just creates huge inflation in real estate prices.

[jxidjhdhdhdhfhf]

No, the middle class isn't some special group that must be protected at all costs. Have them pay more.