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  #46  
Old Mar 27, '12, 7:00 pm
ProVobis ProVobis is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by ACCT View Post
I did not make that statement.
I apologize if I said or implied you did. But for the record, I agreed with you.
  #47  
Old Mar 27, '12, 7:07 pm
ProVobis ProVobis is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by SamH View Post
Home flippers can't use the exemption for gains made on homes they are flipping. You must live in the home a minimum of 2 years for the exemption to apply. If you flip the home in less than a year itís a short term capital gain - subject to the same tax rate as ordinary income. If you hold the property more than a year the gain is subject to long term capital gains tax rate with a 15% cap (in 2012 - 20% in 2013).
You are correct.

Sure an improvement over the older law, though.
  #48  
Old Mar 28, '12, 7:43 am
SamH SamH is offline
 
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by StarFireKK View Post
As for rental property paying for all the taxes.....yes and no. Some of those costs do get pass on to the renters but a lot of places use rental property as tax write-offs and expect a loss. And there is a big difference between renting a 30,000 house and buying a 150,000 house.
.


Where are these places? Few if any small businesses (S Corps and partnerships) use rentals for a tax loss. It's mostly passive income which limits the losses you can deduct. Bigger businesses are in business to make profits - its easy enough to generate a loss unintentionally let alone a loss as part of your business plan. Individuals own rentals to supplement their income and build wealth, not to lower their taxes by lowering their income. If that were the case why have the headache of a rental when all you have to do is walk into your boss's office and ask that you pay be cut?

A company or individual "MIGHT" have a tax loss while having a positive cash flow (rare), but that is cutting it very close.

Depreciation on residential property is usually 40 years - loans on rental property are usually 20 years (you might get lucky and have a 30 year mortgage). Your payments are higher than your noncash depreciation expense - most of the rest of your expenses are out of pocket cash expenses deducted when you pay them. So if you are generating a tax loss you are also generating a cash flow loss too - hardly a good business plan. By the time you charge enough rent to make a property cash flow you are charging enough to make a taxable profit too.
  #49  
Old Mar 28, '12, 7:29 pm
StarFireKK StarFireKK is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Sheesh. I guess I needed to be clearer.

Not every business in the rental industry is operating at a loss. If you live in Chicago or New York I am sure they are making a profit. If you have the nice fancy uptown apartment I'm sure they are making a profit too.

But in smaller cities, towns, and rural areas most of the rental properties aren't own by management companies but by individuals. Most of the time they are renting out the properties because they don't want to sell them. I'm not blowing hot air here- in my line of work I see tons and tons of the individual and business tax returns. Most of the time the rentals are a loss or they barely make a profit.

Why would they do it? Let's take my landlord's case. The house I am living in can't be sold- it has foundation and other issues no one would buy it. Except it is zoned as commercial property. He's renting to us so he doesn't have empty house/land and it offsets some of his taxes and other costs. But his real profit will come when he sells it to a commercial developer.
  #50  
Old Mar 30, '12, 12:47 pm
SamH SamH is offline
 
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by StarFireKK View Post
But in smaller cities, towns, and rural areas most of the rental properties aren't own by management companies but by individuals. Most of the time they are renting out the properties because they don't want to sell them. I'm not blowing hot air here- in my line of work I see tons and tons of the individual and business tax returns. Most of the time the rentals are a loss or they barely make a profit.

Why would they do it? Let's take my landlord's case. The house I am living in can't be sold- it has foundation and other issues no one would buy it. Except it is zoned as commercial property. He's renting to us so he doesn't have empty house/land and it offsets some of his taxes and other costs. But his real profit will come when he sells it to a commercial developer.

So poor properties that can't be sold are rented for what they are worth instead of what the owner mistakenly invested in them.
  #51  
Old Apr 1, '12, 7:20 am
ACCT ACCT is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Government regulations were the cause of the real estate crisis. I know you are tempted to think that the problems with these regulations are the fault of the individuals doing the regulating. Think again. For one thing, almost every government intervention at the root of this crisis took place with a Democratic president or a Democratic-controlled Congress in place. Even when the Republicans controlled Congress, President Clinton worked around it to change the rules to allow Fannie and Freddie into the higher-risk loan market. My point here is not to pin the blame for the current crisis on the Democrats. That blame goes around equally. My point is that hoping that having the "right people" in power will avoid these problems is both naive and historically blind. As much as corporate interests were relevant, they were aided and abetted, if unintentionally, by well-meaning attempts by basically good people to do good things. The problem is that there were a large number of undesirable unintended consequences, most of which were predictable and predicted. It doesn't matter which party is captaining the ship: regulations come with unintended consequences and will always tend to be captured by the private interests with the most at stake. And history is full of cases where those with a moral or ideological agenda find themselves in political fellowship with those whose material interests are on the line, even if the two groups are usually on opposite sides
  #52  
Old Apr 1, '12, 10:42 am
Bklynguy's Avatar
Bklynguy Bklynguy is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by SamH View Post
http://press.experian.com/United-Sta...baby.aspx?&p=1

Not quite, according to Experian. Generation X has more debt than the Baby Boomers, but not by much. Generation Y has the lowest levels of all.
  #53  
Old Apr 1, '12, 12:41 pm
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beehumble beehumble is offline
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Default Re: The end of ownership: why aren't more young people buying a house?

Quote:
Originally Posted by GEddie View Post
They aren't buying because the economy is a wreck and because recent events have shown that housing as an investment is too unstable.

I wonder, if our country had the 50M young citizens that were eliminated since 1973; the older among them having by now entered the housing market; would the thing have flopped the way it did?

You can't remove tens of millions of buyers and expect prices not to suffer.

ICXC NIKA
I have often thought of that too. Our economy is 70% consumer-based, so with 50 million more consumers, it would be absolutely soaring and would have never even slowed down. They talk of an excess of 4.5 million homes - we would have had at least 10 million more people needing homes by now.

Too bad. We are a tribe that is eating its young and now starting to reap the rewards of it; As JPII said, "a society that kills its young has no future" - that is us.

God bless you.
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