2/15/2009

02-15-09 - Blaine St. Steps

The Blaine St. Steps are really amazing, it's the first real hidden treasure I've found here; it reminds me of the many little-known lovely stairways I explored in SF and documented previously here. It's a pretty extreme hill, it's easy to forget that Capitol Hill is really a pretty high rise from sea level which is not far away. There's a really lovely hillside garden area with paths and flowers that people tend. I'm really tickled by these community tended volunteer gardens; it makes me happy that some people take time to work in the earth and do something nice for all of us.

There seem to be tons of houses for sale in the area now. I've been hearing people say "it's a good time to buy a home" or "it's the best time to buy a home in last 15 years" (the second is a literal quote). Umm, no, actually ignoring the last 2 years it's probably the *worst* time to buy a home out of the last 15 years. For one things, prices in desired places are literally FOUR TIMES what they were 15 years ago. In Seattle they are still roughly 200% of what they were only 2-3 years ago. Interest rates are not as low as they were doing the free-money boom, but you also don't have massive appreciation to look forward to. Pretty much anything you buy now is going to be lucky to hold its value for the next 10 years.

There are tons of laws in the US that are basically specifically designed for real estate speculators. So many people do it that it's widely accepted as a "good thing", but it seems quite bizarre to me. Obviously everyone knows about the interest deduction, but the lack of gains tax on profits from your primary residence may be even more significant for speculators.

3 comments:

Autodidactic Asphyxiation said...

I thought the lack of tax on gains from your primary residence only applies when you roll over the profits to the purchase of a new primary residence? Am I just wrong about that?

cbloom said...

Nope, that's a common misconception; it's one of those things like the inheritance tax where politicians talk about it as if its "protecting home owners" when in fact the reality is its a huge loophole for the rich.

It was changed in 1997 :

http://www.bankrate.com/brm/news/real-estate/20041018a1.asp

The rule now is that married people can take $500k in profit tax free every two years. In fact you can ping pong between two homes and keep selling the one you live in and move into the other and take all the profits tax free. And this is not some obscure tax loop hole that nobody does - this is directly recommended by tax advisers.

cbloom said...

Oh that reminds me LOL, I was reading some tax website the other day and it literally said :

"If you're a small business owner, hire your children as employees for odd jobs like cleaning and inventory, because they will be in a very low tax bracket and you can thus give money to them almost tax free. Of course make sure they are doing real work commensurate for their pay."

LOL tax evade-aments.

old rants