Date: Tue, 09 Oct 2007 00:25:56 -0400
To: WSFA members <WSFAlist at KeithLynch.net>
From: "Mike B." <omni at omniphile.com>
Subject: [WSFA] Re: The English disease: was: Various replies
Reply-To: WSFA members <WSFAlist at KeithLynch.net>

At 10/8/2007 10:48 PM, you wrote:

>We don't have quite that problem of owners being trapped, here in the US,
>partly because there is a large capital gains exemption for those who
>sell their homes, and capital gains tax rates are fairly low.

The "large capital gains exemption" is $250K.  With the way real
estate has gone up in the last 3 or 4 years, that's not all that
large, and even a small house is going to eat it up and then
some.  Mine for instance.

Capital gains rates are at income tax levels...since long term
capital gains, like a house in most cases, are taxed as income.  That
rate is anywhere from 15% to 28%...for federal.  Maryland adds on
another 8% for their state and county income tax, and that's on top
of the transfer tax and recordation fees, which are another 5% (no
deduction on that either...it's of the sale price).  Real estate
agents and brokers are going to eat another 4-8% depending on the
price range and deal you work out.

>affordable to the average homeowner.  This effect can be seen clearly by
>comparing real estate tax rates in different parts of the country, or
>even different parts of the same state.  Rates are set lower where values
>are high, and rates are set higher where values are lower.

Unless other factors alter that...like in Texas, where a $200K house
is charged about $8000/year in property tax.  That's a lot higher
than in Maryland...but in Texas there's no personal state income tax,
so if you look at dollars sent to the state government, it's a lot
lower for someone making the sort of money you need to support a
mortgage that large than it is in Maryland.

D.C., Maryland, and Virginia are three of the highest taxed areas in
the US last I looked...and in that order.  I didn't look all that
recently, but I haven't seen any major changes lately either.

-- Mike B.
--
"The American Republic will endure, until politicians realize they
can bribe the people with their own money."
                                     -- Alexis de Tocqueville