The new housing rescue law starting in 2009

還記得我今年二月份時寫了一篇有關 “眾議院同意暫時提高聯邦擔保貸款上限額度”的文章嗎? 今年的暫時上限 $729,750額度到今年底就到期, 如果你在十一月初之前沒有得到貸款公司的Pre-approval, 而且你的交屋期限不是今年底, 你很有可能享受不到這個額度, 因為今年七月底布希總統新簽的H.R. 3221, 厚達六百頁的“Housing and Economic Recovery Act of 2008,” 將原本的聯邦擔保貸款暫時額度從$729,750, 在2009年1月1日起變成永久額度 (permanent increase) 的$625,500.

同一條法案還有許多與你切身有關的改變, 讓我列舉我認為較重要的部份:

– FHA貸款對頭期款的要求, 將從原本的3%, 提高到3.5%.

– 對於 "符合資格" 的首次購屋者 (這裡指的是過去三年, 你沒有擁有或購買房屋), 若於 April 9, 2008 到 June 30, 2009之間購屋, 將得到政府的tax credit, 以購屋屋價的一成, 但不超過$7,500為上限, 買家將分十五年分期攤還 (你的所得稅帳單每年要外加五百塊, 連續十五年直到還完). 對高房價的加州來說, 七千五不是很多, 但是買家可以用那筆錢Buy down the interest rate, 不無小補. 如果你在這十五年中間將房子賣掉, 你必須將剩下尚未還清的部份一次付清.

– 禁止賣方對買方的FHA loans 提供頭期款的協助.

– 新法案暫時提高VA loan的額度到 $625,500, 到今年底為止.

– HERA provides a one-year benefit that will be available to all homeowners. Under current law, property taxes are deductible only if an individual itemizes his/her deductions on “Schedule A” of their tax return. The new provision will permit a deduction of up to $500 ($1000 on a joint return) for all individuals who utilize the standard deduction and do not itemize. Instructions will be provided on the 2008 tax return when it is distributed at year-end.

– 另外一項我覺得很重要的是房屋增值免稅額度(capital gain tax exemption).  原本只要你在主要住宅 (principal residence) 裡在過去五年有住上二年的話, 房屋增值免稅額度是單身$250,000, 已婚$500,000, 所以很多擁有一棟以上房子的人, 會利用這個好處, 將原本出租或是度假用的房子收回, 住上二年後再出售, 便可以享有$250,000/$500,000 的增值免稅額度, 但是新法案就沒那麼好康了. 2009年起, 將按照屋主實際將其以主要住宅的入住天數按比例計算應繳的增值稅. 

以下有四個例子做參考:  

Example 1: Post-2008 Purchase and Sale:  Charlie, whose tax filing status is single, bought a vacation property costing $400,000 on March 1, 2009.  On March 1, 2012, she converts the property to her principal residence.  On March 1, 2014, she sells the property for $700,000, realizing a gain of $300,000.  Thus, she has owned the property for 5 years and used it as a principal residence for 2 years.  On these facts, 40% of the gain (2 / 5) is eligible for the $250,000/$500,000 exclusion (2 years use as a principal residence divided by 5 years of ownership).  The remainder of the gain (60%:  3 years as non-principal residence / 5 years of ownership) will be taxed at the capital gains rate that applies in the year of sale.   

Of the total $300,000 gain, $180,000 ($300,000 x .60) will be treated as a capital gain.  If the capital gains rate in 2014 is still 15%, the total tax would be $27,000 ($180,000 x .15).  Since the remaining $120,000 of gain is less than $250,000, $120,000 is eligible for the exclusion.  Thus, the tax rate on the total $300,000 gain is 9% ($27,000 tax liability divided by $300,000 total gain).  Charlie’s best tax-reduction strategy would be to increase the number of years she uses the home as her principal residence.

Example 2:  Pre-2009 Purchase and Post-2008 Sale:  John and Sara, who file a joint tax return, bought a vacation property in 1985 for $100,000.  During the years they have owned it, they have used it solely as a vacation home.  (In some years they rented it on a short-term basis, but never for a period long enough to require them to recognize the rental income or to require depreciation deductions.)  On January 1, 2011, they move into the home and begin to use it as their principal residence.  During the time they have owned it, they have added $125,000 in improvements.  The community where it is located has become a major resort, so they have enjoyed significant appreciation, as well.  

In 2020, they sell the home for $1 million.  Their taxable gain and exclusion are as follows:

Total amount of gain:  $775,000 ($1 million selling price minus original cost [$100,000] and improvements [$125,000]).

Taxable post-2008 gain:  This is the number of years AFTER 2008 that the property is NOT used as a principal residence, divided by the total period of ownership:

Number of non-residential years:   2   (2009, 2010)       
Number of years of ownership:     35  (1985 – 2020)

Taxable Gain:  2/35 x $775,000 = $44,285
Tax on non-residential use:  $6,643 (assuming 15% capital gains rate)

Exclusion:   Remaining gain:  $730,715  ($775,000 – $44,285)
                      Excludable amount:  $500,000
Remaining taxable amount:  $230,715  ($730,715 – $500,000)
                      Tax on excess over exclusion:  $34,607  (assuming 15% capital gains rate)

Total Tax Liability:  $41,250  ($34,607 + $6,643)
Tax Rate on TOTAL gain:  5.3%  (Tax liability divided by amount of gain:  $41,250 / $775,000)

Example 3: Pre-2009 Conversion to Principal Residence:  Fred and Ethel bought a townhouse that they’ve used solely as a rental property since 1989.  They decided to simplify by selling their big house in the suburbs and moving into the townhouse.  They moved into it on April 15, 2008.  In April 2019, they sell the townhouse.  They have a very low basis in the townhouse because it was used as a rental property for 19 years (1989 – 2008), leaving them with a gain of $600,000.  

When they sell the townhouse, they will be eligible for the $500,000 exclusion because the property was their principal residence on January 1, 2009.  In this case, they will pay tax on the $100,000 excess over $500,000 ($600,000 gain minus $500,000 exclusion) at the capital gains rate in effect for 2019.  In addition, they will be liable for the depreciation recapture taxes for the years that the property was used as a rental property.  The depreciation recapture tax will be imposed at the rate in effect for 2019.  (That rate is presently 25%.)

Example 4: Estate Tax Implications: Same fact as #3, but Fred and Ethel both die in 2018, still owning and living in the townhouse.  Their children inherit the property.  All estate tax liabilities have been satisfied, but the heirs don’t want to live in the townhouse or maintain it as a rental property.  In 2019, they sell the townhouse for $900,000.  The townhouse had a fair market value of $825,000 when Fred and Ethel died.  (Assume that in 2018 any estate tax rules still permit a stepped-up basis; i.e., the value of the property in the hands of the heirs is the same as the fair
market value on the day of their parents’ death.)

The property has been a rental property, a principal residence and part of an estate.  When the heirs sell the property, they are permitted to treat the property as if it had been their own principal residence, so long as their parents had lived in the home for two of the five years before their death.  Their gain on the sale is $75,000 ($900,000 – $825,000).  The $75,000 gain may be excluded from taxation under the $500,000 exclusion rules.

If the estate tax rules are changed and require the heirs to use the same basis their parents had in the house, the result would be very different (and, as a practical matter, very difficult for the heirs to ascertain).  If, for example, the parents’ basis had been $125,000 and the heirs sold the property for $900,000, they would have a taxable gain of $775,000.  $500,000 would be excluded.  The remaining $275,000 would be subject to capital gains taxes at the rate in effect for 2019.  It is not clear how any depreciation recapture amount would be taxed.  Unless there are meticulous records, the heirs would have a difficult time ascertaining the correct amount.