25% flipping tax??? Not cool.
Residential Real Estate Agent · Phoenix, AZ · Member since 2016 · 154 posts · 117 votes
25% flipping tax??? Not cool.
Most Popular Reply
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
7yI 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.
54 Replies
- Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes7y
Flipping single family houses doesn't really affect "affordable housing" which usually encompasses rental apartments.
In the more modest areas of my city, the rehabbers (flippers) should be very welcome to operate. Generally, a good rehab updates the electric, plumbing, roof, furnace and windows.
If housing stock is not maintained and updated, then the neighborhood will depreciate.
Horrible, ignorant proposal. The best way to address housing issues, is to allow the market to build more. And give vouchers to those in need.
- Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes7y
Originally posted by @Thalia G.:
@Jeff Schneider that guy never even had a job before he became mayor of Birmingham.
But he NOW owns some very valuable real estate. this will probably get deleted but it's a sad reality.
- Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes7y
Originally posted by @Jeff Schneider:
Let's not get into politics but since we're all like minded-ish investors, read this and let us know what do you think of forcing market changes, area changes, affordability, excessive taxing etc?
https://theweek.com/speedreads/865930/bernie-sanders-proposes-25-percent-house-flipping-tax-new-housing-plan25% flipping tax is as likely to happen as Bernie is likely to get elected president - 0% chance.
- Rental Property Investor · Boulder, CO · Member since 2019 · 144 posts · 72 votes7y
@Jeff Schneider
I’m not a wizard, but he simply wants to penalize people for making a profit. He is not considering any other perspective other than that. He probably thinks flippers are artificially escalating home prices for quick profit and pricing people out.
So, basically, penalizing profit. As an aspiring investor, I agree with all the responses here though.
- Calgary, AB · Member since 2019 · 7 posts · 2 votes7y
@Jeff Schneider
I mean investors will still keep flipping and selling houses for profit. Prices will become more and more expensive, and who will pay that added 25%? - The end user.
- Member since 2019 · 20 posts · 7 votes7y
@Tesfa Mulat It's always the side with the least bargaining power who really pays the taxes. You are admitting it's the end resident who has less bargaining power than you do.
- Member since 2018 · 1k+ posts · 1k+ votes7y
"that guy never even had a job before he became mayor of Birmingham."
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You mean Burlington. He's from Vermont.
- Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes7y
Originally posted by @Account Closed:
Flippers drive up prices. You know this. Not taking a political side on this one, as I am interested in flipping myself, but why it's "vilified" isn't mysterious.Agreed. But Developers are the linchpins who are creating more housing, and I'd say they are lumped in and equally vilified in this particular plan (Direct Link to plan the article is discussing https://berniesanders.com/issues/housing-all/). Language used in plans like these vilify everyone who's making money by buying and changing real estate. It shouldn't.
The problems and history described are real - I get that. I know it sucks for grandma and her two neighbors when they have to move out of the three contiguous houses I just bought, but it's gotta happen if we want 24 new units (net gain of 21 housing units) to get built. It's illogical to vilify the Developer for making happen exactly what the plan calls for (ie: more, quality housing). Unless the plan is to have the government kick grandma out and build all that housing...
- Rental Property Investor · MD, 20878 · Member since 2019 · 18 posts · 5 votes7y
@Michael Tyler
Agree with what you have to say. An average home buyer will never win a bidding war where investor cash is involved.
- Member since 2019 · 106 posts · 32 votes7y
@Jeff Schneider. It would just force flippers to do more brrrr and hold for 5 yrs. the 2% vacancy tax sounds populist and dumb. For most people when a unit is vacant you’re already struggling to pay the mortgage. Foreclosures would probably explode in that scenario.
- Specialist · New York City, NY · Member since 2019 · 34 posts · 111 votes7y
@Jeff Schneider It's aimed at stopping gentrification. What they call "pushing out the poorer people to make room for the richer folks". If you get to the bottom of socialism, it's all about destroying anything and anyone who has or makes money.
They couldn't care less about improving neighborhoods, reducing blight, reducing crime and everything else...
You can make everyone equally poor but never equally rich. When they finally learn that, it'll be too late.
- Rental Property Investor · Los Angeles, CA · Member since 2019 · 111 posts · 38 votes7y
@Jeff Schneider
He won't be getting my vote
- Flipper/Rehabber · Cleveland, OH · Member since 2014 · 173 posts · 121 votes7y
@Jeff Schneider
Bernie can say his tax is coming from me all he wants but I assure him it’s factored into the buy.
The seller of the distressed property will be affected the most.......
- Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes7y
@Jeff Schneider Fascinating to read actually!
One thing caught my attention as I read Bernie's plan "discouraging speculative real estate investments" by putting a 25% Flipping Tax levy bill will most NOT likely fly as some politicians are themselves, Real Estate Investors, so that is, for starters, a dead bill.
Now, if the bill were to pass the House and Senate, sure it may affect "flippers" in the short term, but, in the long term, most flippers will just wait out the 5-year threshold and then sell the house, which will then worth much more and possibly push houses prices up a bit more.
Consequently, I do not see how this tax will directly help to "increase" housing stock if anything, it may have an opposite effect. Sometimes, don't you think politicians just say what they think people want to hear to get votes? 🗳️🗳️🗳️
- Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes7y
Nothing but socialism and pure lunacy. I imagine we would see a lot more blighted properties because owners don't have the experience or the funds to do the renovations themselves but also don't want to sell at dirt cheap prices to flippers. I would have to factor this ridiculous huge expense into every offer I make.
Good news is, I don't think something like this will ever pass. I don't understand where all these ultra left politicians are coming from with these crazy ideas.
- Member since 2018 · 563 posts · 562 votes7y
Bernie Sanders is PATHETIC! Socialism is one of the worst most corrupt form of government, second only to complete autocratic authoritarianism, which is what it usually deteriorates into.
You're better off requiring that all senators and congressman must have a minimum of 20 years actual work experience owning a small business, or 10 years corporate experience(fortune 500 or larger), or 10 years of military, police, EMT, Fire before they are allowed to "represent" us.
Also, make it illegal for previous government employees to work in lobbying firms.
Make it illegal for anybody with a net worth of over a million to donate more than $5000 in campaign contributions. Hell just make it illegal for corporations to contribute to campaigns.
There is no housing shortage, there are plenty of affordable houses, but, they are not in Los Angeles, SF, NY...guess what? move an hour or two away from all of those cities and there is plenty of vacancy and affordability.
Why do people think that everyone deserves to have a beach front house, or lake front view, or place right in the middle of the city?
Don't let the scumbag Marxists manipulate us, on behalf of the commies!
Thanks for reading and rant complete, you may have the soap box back now.
- Member since 2019 · 20 posts · 7 votes7y
@Isaac S. Wow your the first post I read here not thinking purely with his/her own wallet. A ban on corporate political donations would require overturning the Citizens United US Supreme Court decision, which is actually one of Sanders' central campaign promises. I disagree with you about some people not having a right to live on the coast or in the Big City. Rather, I think the coast and the Big Cities should just have enough housing stock to accommodate everyone who wants to be there at a reasonable price. Ya housing might be cheaper two hours away, but likely there's no good jobs in someone's industry out there, and I don't believe in making people live their lives commuting. I don't think people should have a right to what TYPE of housing they have in high demand places, i.e., absolutely demolish all those pesky SFHs and replace them with multiplexes and skyscrapers. Build baby, build.
- Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes7y
@Chris Kdjdfjb You have a right to live where you want but you don't have the right to a "reasonable price" whatever that may be. The fact is, land is a scarce resource, especially in the coast. There isn't enough to accommodate everyone who wants to live there for a "reasonable" price. So supply and demand will set the cost. And no, you can't just demolish the pesky SFHs because they are private property even though I myself would love to see more multifamily and skyscrapers.
- Member since 2018 · 563 posts · 562 votes7y
Originally posted by @Chris Kdjdfjb:
@Isaac S. Wow your the first post I read here not thinking purely with his/her own wallet. A ban on corporate political donations would require overturning the Citizens United US Supreme Court decision, which is actually one of Sanders' central campaign promises. I disagree with you about some people not having a right to live on the coast or in the Big City. Rather, I think the coast and the Big Cities should just have enough housing stock to accommodate everyone who wants to be there at a reasonable price. Ya housing might be cheaper two hours away, but likely there's no good jobs in someone's industry out there, and I don't believe in making people live their lives commuting. I don't think people should have a right to what TYPE of housing they have in high demand places, i.e., absolutely demolish all those pesky SFHs and replace them with multiplexes and skyscrapers. Build baby, build.
Hey Chris,
Thanks for the comments! First, I am thinking with my wallet. I believe that free markets, that best express the true nature of supply and demand, are the best way to deal with finite resources(real estate). Also, I think that I am willing to work harder, sacrifice more now for more later, and am smarter than the overwhelming majority of people in general and absolutely more than socialists... so, it is in my self interest to have a competitive environment that best rewards my competence and sacrifice.
Secondly, I wanted to address a very ambitious comment you made:
"I think the coast and the Big Cities should just have enough housing
stock to accommodate everyone who wants to be there at a reasonable
price."Who decides what a reasonable price is?
How do cities go about "...just have enough housing stock..."?
Do you how much it cost per square foot to build in Los Angeles? Do yo know how much of that cost is due to cost of permits, cost of design features that are a result of extremely strict building codes?
Do you know how much it cost to build in parts of the country that are not held back by restrictive municipalities?(it's about 80% less)
What's the most money you made in a year? How did you make it?
Have you ever had to deal with a plumbing pipe burst at any time between midnight and 5am?
Have you ever had a city inspector give you 30 days to comply with a repair order, but, it took 14 days of that time to process and mail said notice? The city will give you less time to do repair than they take to notify you of the repair.
Anyway, I'm trying to provoke some empathy in you, so maybe you can be self aware enough to know anybody that says something like:
"I think the coast and the Big Cities should just have enough housing
stock to accommodate everyone who wants to be there at a reasonable
price."Is either extremely naive or not capable of understanding basic micro/macro economic principals. Good luck!
- Member since 2019 · 20 posts · 7 votes7y
@Isaac S. Dude chill out. California is indeed in dire need of looser building restrictions and it's both a shame and really a humanitarian crisis that their politicians, particularly the local NIMBYs, have manufactured. That being said, land tycoons are not the ones in need of empathy. They never will be, due to their position of financial power. And I feel no need to contribute to the one-sidedness of this thread.
- Member since 2018 · 563 posts · 562 votes7y
Originally posted by @Chris Kdjdfjb:
@Isaac S. Dude chill out. California is indeed in dire need of looser building restrictions and it's both a shame and really a humanitarian crisis that their politicians, particularly the local NIMBYs, have manufactured. That being said, land tycoons are not the ones in need of empathy. They never will be, due to their position of financial power. And I feel no need to contribute to the one-sidedness of this thread.
"land tycoons" ...you are speaking psuedo-Marxist class babble.
It's one sided because only one side is right!
All of your talking points can be picked up at any liberal arts degree or unfortunately in many public schools. Phrases like "local NIMBYs" give you away.
Please study some economics or math or engineering...anything other than the liberal arts garbage that is only teaching you how to hate the more competent among us.
- Member since 2019 · 20 posts · 7 votes7y
@Isaac S. Cool it with the personal attacks. It's not about you, it's not about me, it's about the people trying to live their finite lives in a nice part of the continent. You can be there too, the goal should be to make room for everyone. Maybe land is a finite resource, but housing isn't. And so Survival of the Fittest doesn't need to apply to it as much as you imply it does. If supply is too low, the long term solution isn't to lower demand (make people leave or be homeless) but to raise supply. California clearly has a problem. Nobody here thinks they're solving it the right way. But the victims are the ones at risk of having to move or become homeless, not the ones who are going to pass along the added costs anyway because bargaining power in CA is that one-sided.
Now about avoiding the 25% flipping tax if you don't want to go into the land lording business... Could you say, join a partnership where you do the flip and the partner(s) landlord and contribute capital to keep the buying going? You'd need enough partners to have enough capital to keep yourself busy through the five year rolling buffer. This plan would mostly fall apart if the bubble bursts within five years. But you believe in your buys because you operate on fundamentals and not speculation or worse, a pump and dump strategy, right?
- Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes7y
Sanders rather see hoarders in a home rather than someone buying a property, fixing it and renting it or selling it. To Sanders, beautifying a neighborhood is wrong and landlords need to keep & support hoarders in the home after fixing it. He'd rather see Everyone live in North Korea conditions.
He wants to make home ownership easier...Remember the market crash in 2007 and that was because there were no lending restrictions and minimum wage earners were buying $500K houses. Now, anyone can buy a livable home in the midwest for $50K so how much easier does he want it? Geez, if i can't pay my mortgage i get thrown out and nobody cares where i move to. But....its not okay to make a neighborhood safer and better because rent increases and displaces people that actually had the first shot at buying the property and changing the neighborhood for the better.
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