Tax Guru-Ker$tetter Letter

Wednesday, October 31, 2007

Another attack on Sec. 121 exclusion?

From a reader:

Subject: An End to the Beach House Loophole?

Kerry-

Didn't know if you had seen this, as always anything helping, not punishing, the "rich" is a loophole. Chuck Rangel's grand scheme may have pushed this off your radar.

An End to the Beach House Loophole?

My Response:

Thanks for pointing this out. I hadn't seen it.

However, while I have long believed that there should be zero tax on all capital gains, it is long overdue that our rulers in DC go after "evil rich" folks who have been following our tips to exploit the tax free residence sale rule by converting rentals and vacation home into primary residences. I'm actually amazed that it's taken them this long, over ten years, to attack this popular and very legal tax savings trick.

If they do succeed in plugging up this loophole, we'll have to figure other ways around the tax bite, such as more uses of Section 1031 exchanges.

The Tax Game never ends, as long as the rules are constantly being changed.

Thanks again for sharing that article.

Kerry

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/31/2007 03:10:00 PM Send this post: