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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Jim McMannis who wrote (64671)3/20/2007 12:12:26 AM
From: CalculatedRisk  Read Replies (1) of 116555
 
Prop 13 had a big impact. And there is no question that housing is tax advantaged. But the change in '97 was irrelevant.

Before the change, how much did you pay in taxes when you sold? Nothing if you moved up, and you received a one time exemption to move down if you were over 55.

So what changed? Now people with more expensive homes have to pay taxes, even if there were moving up. So I suppose you could argue the '97 change was a small drag on housing.

The only people that profited from the change were people moving down (less expensive home) or renting. If you are arguing that there was a large move to renting over the last 5 years, you'd be laughed off of SI! Yes, there was some who moved down - especially in the last year or so - but it wasn't a significant part of the housing market.

So we can dismiss the Rep John Kasich (R-OH), Senator Roth (R-DE) sponsored Tax Relief Act of 1997 as irrelevant to the boom.
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