In the early 1990s the capital gains tax on property was boosted to 90% and this was before a slew of other property exactions were piled on.
Fears of a property bubble that, if it burst, could create urban China's first widespread experience of negative equity prompted the authorities in Shanghai last week to announce a 5.5% capital-gains tax on the sale of property held for less than a year.
Section 206 provides a juicy capital-gains tax exemption for contributions of property for conservation, meaning wealthy environmentalists with extra acreage will be able to take a tax deduction for the appreciated property and have the environmental organization preserve it, adding to the value of the primary property.
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Let me count the ways: income taxes, Social Security taxes, Medicare taxes, property taxes, capital gains taxes, dividend taxes, sales tax, gas taxes, payroll taxes, business taxes, inheritance taxes, gift taxes, tariffs, tolls, and excise taxes.
Higher property prices boost tax revenues directly, through levies on capital gains or on transactions (such as stamp duty in Britain).
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If, however, you live in a community property state and hold property jointly, at the death of the first spouse the entire property is stepped up in basis--meaning it can be sold immediately without gains tax.
Upon the ultimate sale of the property, basis-adjusted profit is taxed at the current capital gains rate, typically lower than income tax.
If the property has been held for more than one year, gains are taxed at favorable long-term capital gain tax rates.
But a good slice of the blame for the housing boom must go to the Howard government which, in effect, slashed the tax rate on capital gains to half the top rate of income tax, luring a mountain of speculative money into property.
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