25% flipping tax??? Not cool.

54 Replies

I really don't get why folks vilify flippers. When a hoarder home or chopshop with illegal squatters is turned over, that does nothing but a) reduce neighborhood crime b) increase values of the 10 houses to the left/right and across the street c) increase the safety of the neighborhood, and d) remove blight. Often this is above/beyond the power of local law enforcement to accomplish the same. 

When I see a house purchased by an anonymous LLC in my neighborhood and then see all the workers show up, and I start hearing those loud construction noises at 9:01 AM from a block or three away, it makes me genuinely happy. This is a good thing for me, not a bad thing. And do I spite that flipper for making a buck? Heck no, and odds are I made a buck too, in terms of what I could sell the house I own for!

In my particular case I'm in the SF Bay Area, so that blighted house being turned over (maybe we should stop using the word "flip"?) is probably also increasing the housing supply, something much needed around here. 

I agree with @Chris Mason . I LOVE seeing flippers around my neighborhood. I also live in an area with not a lot of new builds (San Diego), so I love seeing improvement. And it doesn't hurt that it improves the value of my home ;-)

Bernie is 3rd and falling in most polls. I think we do not need to worry about his policies as much as some other candidates.

How about start with limiting the home owner interest/prop tax write off to a single home? You know why I feel they do not start there? It is because virtual all of congress has a home in their represented state and a home in DC or elsewhere. I realize it would be a very small start, but at least it is a start that does not discourage the RE investors who are needed to build, rehab, maintain, etc. these properties. Basically if they drive down the cost of new housing, they reduce the incentive to build new housing (seems obvious but apparently is not to everyone).

You can't make housing more affordable by making it more expensive to be in the housing business. That is true whether the cost is taxes, fines, zoning or more stringent code restrictions.

@Jeff Schneider I completely agree that an flipper tax is terrrrrible idea that would artificially shackle people to their homes and prevent blight from being excised.

I am however actually fascinated by the thought experiment of an empty home tax. Im still running this through my brain. Not saying im for it, just pondering

Well, for a pure flip (short term) if we only paid 25% tax (without the self employment tax) that would be a bargain!  For non owner occupied over a year, not so good.  It’s just him trying to appeal to the ultra left wing socialist crowd anyway... it’ll never happen.

is this propsal and EXTRA 25% on top of the capital gains?  I'm not too concerned as I doubt any such tax would ever go through.  They have been trying to implement stock purchases/transaction tax for years, never happened.  Democrats always looking out for the poor and giving handouts when in fact they are stifling them.  NY Gov Cuomo just eneacted new Tenants rights; what a fiasco.   No more 3-day quit.  a tenant can stay in the property for nearly 3 months for free and trash the place.  so lets protect them. So now this is likely going to reduce space for those in need because landlords will be less likely to rent to them, raise rents as well. (oh  they also say rent can't be raised more than a certain % like 2-3 for a new lease.

I personally have seen what house flippers have done to turn neighborhoods around and it was amazing.  And a lot of times it starts a chain reaction where other neighbors start improving their curb appeal.  Nobody wants to live next door to the Munster house.

@Chris Mason Flippers get a bad rap because locals, even scraping together every resource they can, get beat out of offer after offer by investors paying cash.

I see both sides, I’m that cash buyer now. But a few years ago I was the guy pushed out of my hometown because it was impossible to buy, even in the rough areas.

Rather than tax flippers, the solution should be something akin to Fannie/Freddy foreclosure sales, where owner-occupant offers get priority treatment. Leave the real dump properties for the investors who know what to do with them.

Originally posted by @Edward R. :

is this propsal and EXTRA 25% on top of the capital gains?  I'm not too concerned as I doubt any such tax would ever go through.  They have been trying to implement stock purchases/transaction tax for years, never happened.  Democrats always looking out for the poor and giving handouts when in fact they are stifling them.  NY Gov Cuomo just eneacted new Tenants rights; what a fiasco.   No more 3-day quit.  a tenant can stay in the property for nearly 3 months for free and trash the place.  so lets protect them. So now this is likely going to reduce space for those in need because landlords will be less likely to rent to them, raise rents as well. (oh  they also say rent can't be raised more than a certain % like 2-3 for a new lease.

Yes, this would be a 25% tax on the profit of the flip (which we all know we can play with those numbers with LLCs, so this is a useless proposal really. So if you made $40k on a flip, you have to pay $10k to the government as a flipping tax. At the end of the year or quarter you would then need to pay your normal taxes of probably another $10k. So you get $20k and the government gets $20k. This is just a race to who can claim to steal the most money and give it away to the most people for their votes

@Wayne Brooks - this isn’t really a reply to you Wayne but a reply to the initial question posted (can’t figure out how to do a generic reply in the app as opposed to my laptop). The big taxes on flips (short term capital gains among other things) is why I switched to rehab and hold. Building a portfolio for long term wealth rather than short term profits.

@Ryan Proffit

As a strong Conservatarian & die hard Austrian/Biblical Economics Capitalist I’m totally against this.

Not to mention that I just flipped a house in Frisco, TX on a golf course & did an excellent job & made $36k, yet I lost money on the deal due to a greedy mother in law who pocketed the whole lump sum at sale & never paid the 1/3 split, then went on to spend $600k in a few months!

So I now know what’s it’s like to work your *** off taking constant trips to lows & dump & scheduling & cutting tens of thousands of cost on everything & then be taxed by a family member at 100%!

I can easily handle a Socialist Democrat like Bernie after this!

I wouldn't worry too much about Bernie and his proposals.  He won't win the democratic nomination much less the national election. 

Also I doubt his plans would stand up in court.  I would imagine that taxing someone 2% on the property value just because their home is empty wouldn't fly.