A lot of moving targets on the Senate and House versions of the Tax Bill. Deciphering what it all means and trying to advise clients on actions to take in the little time left in the year is challenging.
This is the first I had heard of this provision:
Lots to unpack with this one – there is the immediate impact on those short term hold sellers of the tax on the gain, which could be a significant tax hit since our market has appreciated significantly in the past two years.
The follow-on implication for the region in general is the affect on the supply of homes for sale.
Currently, our market is suffering from a shortage of available homes for sale – good for existing homeowners as values/equity shoots up, bad for buyers and bad for affordability, which makes the area less desirable from a business relocation/expansion perspective.
The problem, according to the article, is that currently, 20% of home sales in Denver/Boulder are from sellers who occupy from 2 – 5 years. If this longer holding requirement causes those sellers to lengthen their hold horizons to avoid the tax on the gain, we could have an additional factor that could depress the supply of homes for sale.
Again, not bad from the perspective of those who stand to see a gain in equity, but not good for new market entrants and for continued economic growth across the region.
This information is coming from the linked Denver Post article – I, personally, have not been able to fully digest the various bill provisions. There are a number that impact real estate – both commercial and residential. Congress is still wrangling over the final language, but with 3 weeks left in the year, there’s not a lot of time for potential sellers to react to this if it comes to fruition.