Difference between revisions of "Talk:Owning vs renting"

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Note: One element in the home ownership equation relates to  estate valuation and the estate taxation system. The net equity value of the home is an estate valuation asset (as is the value of life insurance death benefits). In combination, both of these estate value assets can greatly increase the taxable estate well beyond what many investors might think of as their invested wealth.  As of now, the Congress has not addressed the return of the pre-2000 taxable estate exemptions which are scheduled to revert back into law after 2010. --[[User:Blbarnitz|Blbarnitz]] 02:47, 31 May 2009 (UTC)
 
Note: One element in the home ownership equation relates to  estate valuation and the estate taxation system. The net equity value of the home is an estate valuation asset (as is the value of life insurance death benefits). In combination, both of these estate value assets can greatly increase the taxable estate well beyond what many investors might think of as their invested wealth.  As of now, the Congress has not addressed the return of the pre-2000 taxable estate exemptions which are scheduled to revert back into law after 2010. --[[User:Blbarnitz|Blbarnitz]] 02:47, 31 May 2009 (UTC)
 
::Barry, I'm not sure I see your point.  If I have a $4 M estate, and my choice is between having $500 K in capital gains in my home at death versus an incremental $500 K in capital gains in mutual funds, there is no difference in treatment for the home is there?  As compared to a sale during my lifetime, when the capital gains treatment difference is night and day. -[[User:Dan Kohn|Dan Kohn]] 19:37, 31 May 2009 (UTC)
 
::Barry, I'm not sure I see your point.  If I have a $4 M estate, and my choice is between having $500 K in capital gains in my home at death versus an incremental $500 K in capital gains in mutual funds, there is no difference in treatment for the home is there?  As compared to a sale during my lifetime, when the capital gains treatment difference is night and day. -[[User:Dan Kohn|Dan Kohn]] 19:37, 31 May 2009 (UTC)
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::: The point is that housing (and insurance death benefits) can very easily execeed the personal estate tax exemption (which if memory serves, is $750,000 when the reversion to pre-2000 estate tax is set to occur after 2010, although congress is likely to legislate this issue by the end of 2010.) Since estate tax rates start at 45%, the value of a residence is not a trivial issue. (Throwing away a 750,000 exemption results in a $337,500  estate tax due nine months after the surviving spouse dies. Married couples would need to execute A-B revocable living trusts in order to preserve each spouse's estate tax exemption.) This is  especially valuable in community property states, since community property can be easily allocated to either trust. And since our community property states are all part of the Continental (Spanish and French) legal systems, they are mostly situated in the Western US (as a function of the Spanish heritage). As you know, property values in California and the West Coast greatly execeed values in the Mid West or South.--[[User:Blbarnitz|Blbarnitz]] 21:15, 31 May 2009 (UTC)

Revision as of 16:15, 31 May 2009

Note: One element in the home ownership equation relates to estate valuation and the estate taxation system. The net equity value of the home is an estate valuation asset (as is the value of life insurance death benefits). In combination, both of these estate value assets can greatly increase the taxable estate well beyond what many investors might think of as their invested wealth. As of now, the Congress has not addressed the return of the pre-2000 taxable estate exemptions which are scheduled to revert back into law after 2010. --Blbarnitz 02:47, 31 May 2009 (UTC)

Barry, I'm not sure I see your point. If I have a $4 M estate, and my choice is between having $500 K in capital gains in my home at death versus an incremental $500 K in capital gains in mutual funds, there is no difference in treatment for the home is there? As compared to a sale during my lifetime, when the capital gains treatment difference is night and day. -Dan Kohn 19:37, 31 May 2009 (UTC)
The point is that housing (and insurance death benefits) can very easily execeed the personal estate tax exemption (which if memory serves, is $750,000 when the reversion to pre-2000 estate tax is set to occur after 2010, although congress is likely to legislate this issue by the end of 2010.) Since estate tax rates start at 45%, the value of a residence is not a trivial issue. (Throwing away a 750,000 exemption results in a $337,500 estate tax due nine months after the surviving spouse dies. Married couples would need to execute A-B revocable living trusts in order to preserve each spouse's estate tax exemption.) This is especially valuable in community property states, since community property can be easily allocated to either trust. And since our community property states are all part of the Continental (Spanish and French) legal systems, they are mostly situated in the Western US (as a function of the Spanish heritage). As you know, property values in California and the West Coast greatly execeed values in the Mid West or South.--Blbarnitz 21:15, 31 May 2009 (UTC)