The Taxpayer Relief Act of 1997, signed by none other than rascally leprechaun Bill Clinton himself, provided some curious incentives, as it turned out, that we might do well to remember. Coupled with the Balanced Budget Act, TRA of 1997 arguably helped to create the much heralded—and in many ways miraculous—federal budget surpluses starting in 2000. The surpluses quickly vanished under the leadership of a fiscal conservative.
But one of the provisions of the act was that profits on the sales of primary residences would be tax free up to $250,000 for single persons and $500,000 for couples filing jointly. You’d have to look long and hard for other ways to make half a million taxless dollars.
Surely, the promise of loot encouraged homeowners to take advantage of this. Along with the mortgage income tax credit and cheap money, the pot of gold at the end of every house sale rainbow begot more buying and selling. Which helped beget, well…this, didn’t it?
Interestingly enough, owning a house might not even be that great an investment, and those now waiting for pots of taxless gold will most likely wait some time.
One wonders what the intention was for a tax cut that encouraged people to move out of their houses. Probably churn. What a noisy spectacle it was: musical chairs with “cozy” condos, “quaint” Craftsmans, and “darling” Colonials. Unfortunately, the music has stopped.