Quote:
Originally Posted by woj
one reason can be illustrated by following hypothetical example:
- you buy a $100k house (at a time when a "car" costs $20k, so you can buy 5 "cars")
- inflation rate is 10%/year
- so 10 years later you sell that house for $200k
- naive person would think you made $100k "profit", but really that $100k is "phantom profit"
- you get taxed 50%+ like Sanders proposed on that 100k "phantom profit" and so you end up with $150k
- you try to spend that $150k on other goods and notice that your buying power is far less than what you had 10 years earlier... ("cars" went up 200% too, so they now cost $40k, you want to buy cars now, but can't even buy 4 of them when 10 years earlier you could have bought 5 with your capital)
so when all is done, you had your capital frozen for 10 years and end up with negative real rate of return on top of that... 
there are indeed some tricks to minimize the damage... but 1031 has many limitations, cash out refi is great if interest rates are low, when they are high it doesn't work that great anymore... |
Well if it's a personal residence then as of now you get capital gains waived. Also you cannot 1031 a personal residence and also the main goal of a personal residence isn't investment
Now if you invested in this scenario you'd have to compare your results to other investments to see how it would perform. They would also face 10% inflation and 50% capital gains. Can just abuse roths and tax deferred some more...
If I want to start a business with this money why should I be taxed at 30%+ of my profits then just 15% if I lazily just stick it in the stock market.