Monday, October 20, 2008

The End of Ballardia as We Know It

Over the summer, a 694 page "Amendment to Senate Amendment to House Amendments to Senate Amendment to H.R. 3221" was passed into law.

You may know it by its Short Title, the Housing and Economic Recovery Act of 2008.

Buried in section 3092 was a little item to upset my Housing Recovery of Ballardia Acts of 2008.

Let's read it, shall we?

(4) EXCLUSION OF GAIN ALLOCATED TO NON QUALIFIED USE.—
(A) IN GENERAL.—Subsection (a) shall not apply to so much of the gain from the

sale or exchange of property as is allocated to periods of nonqualified use.
(B) GAIN ALLOCATED TO PERIODS OF NONQUALIFIED USE.—For purposes of
subparagraph (A), gain shall be allocated to periods of nonqualified use based on the
ratio which—

(i) the aggregate periods of non qualified use during the period such property
was owned by the taxpayer, bears to

(ii) the period such property was owned by the taxpayer.
(C) PERIOD OF NONQUALIFIED USE.— For purposes of this paragraph—
(i) IN GENERAL.—The term ‘period of nonqualified use’ means any
period (other than the portion of any period preceding January 1, 2009)
during which the property is not used as the principal residence of the
taxpayer or the taxpayer’s spouse or former spouse.
(ii) EXCEPTIONS.—The term ‘period of nonqualified use’ does not include— (I) any portion of the 5-year period described in subsection (a) which
is after the last date that such property is used as the principal

residence of the taxpayer or the taxpayer’s spouse,
(II) any period (not to exceed an aggregate period of 10 years) during which
the taxpayer or the taxpayer’s spouse is serving on qualified official
extended duty (as defined in subsection (d)(9)(C)) described in clause (i),
(ii), or (iii) of subsection (d)(9)(A), and

(III) any other period of temporary absence (not to exceed an aggregate period
of 2 years) due to change of employment, health conditions, or such other
unforeseen circumstances as may be specified by the Secretary.


So who Knows what this little blurb of legalese means, really. But Martin assures me that it means a change to the Capital Gains Exclusion Rule, which, before the passing of these 694 pages, allowed an individual to keep, tax-free, profits up to $250k ($500k if married filing jointly) for the sale of his or her (their) primary residence provided that person(s) had lived in the home for 2 out of the previous 5 years.

Section 3092 says that starting January 1, 2009, if that home had NOT been a primary residence (say, rented or a vacation home) for any part of those 5 years, then capital gains would ONLY be excluded for the portion of the last 5 years in which the home had been a primary residence.

So....live in it for 2 years, rent it for 3 years, and only 2/5 = 40% of the gains are now tax-free. And that appears to apply to all gains, even if it's been owned for, say, 15 years, only the last 5 count.

This presents a little problem.

You see, back in 1999, Martin rented out his condo and I rented out my house, and we proceeded to shack up together in an apartment in Belltown.

Yes, he kept the condo. And without a little action on our parts ASAP (before 1/1/09), he would be subject to the new rules for a condo he's owned for 15 years. Conveniently for him (inconveniently for me), his tenant of 3 years gave notice on October 9th.

Activity Frenzy. We are moving to the condo.

WHOSE housing recovery act is this, exactly? Certainly isn't mine.

9 comments:

lannadesign said...

Hi
Do you want to put up 2 text links on your blog and get some $ / yr for it?
If yes please contact me at hannasdesign@gmail.com
Have a great day
Hannahmiriam

http://empoweringthoughts.blogspot.com/
http://wealthattracting.blogspot.com/
http://sorelaxing.blogspot.com/
http://directoryforblogs.blogspot.com/

Anonymous said...

haha..................................................

Anonymous said...

I just found the website who writes about
Several
home based business

If you want to know more here it is
home based business
www.home-businessreviews.com

Anonymous said...

You have really great taste on catch article titles, even when you are not interested in this topic you push to read it

Anonymous said...

ahvcudwbn http://www.free-mass-traffic.net/free-mass-traffic/free-mass-traffic-review Free Mass Traffic

Anonymous said...

Hey i just came here to let you know about a service i offer. I offer cheap backlinks that can help you website rank significantly better on Google. Traffic is everything and to get decent traffic you need to rank well in the search engines. My service can help provide that, check out my site http://hellomotow.net/backlinks

Anonymous said...

A comprehensive suitableness program tailored to an individual wishes very likely pinpoint on sole or more clear-cut skills, and on age-[3] or health-related needs such as bone health.[4] Many sources[citation needed] also cite mental, social and nervous constitution as an superior vicinity of all-inclusive fitness. This is regularly presented in textbooks as a triangle made up of three points, which represent solid, nervous, and loony fitness. Incarnate seemliness can also prevent or investigate many chronic fitness conditions brought on past detrimental lifestyle or aging.[5] Working unconfined can also remedy people forty winks better. To visit vigorous it is consequential to combat in actual activity.
Training

Unique to or task-oriented [url=http://www.pella.pl]fitness[/url] is a human being's talents to perform in a determined enterprise with a tolerable expertness: seeking sample, sports or military service. Specific training prepares athletes to appear as wonderfully in their sports.

Examples are:

400 m sprint: in a sprint the athlete must be trained to work anaerobically throughout the race.
Marathon: in this what really happened the athlete must be trained to function aerobically and their persistence must be built-up to a maximum.
Multifarious alight fighters and police officers undergo typical aptness testing to end if they are qualified of the physically hard tasks required of the job.
Members of the Collective States Army and Army Native Look after necessity be able to pass the Army Physical Fitness Test (APFT).

Anonymous said...

jouwqcocp www.louisvuittonluggageonline.com dadivkesz [url=http://www.louisvuittonhandbagsdiscountsale.com]cheap louis vuitton[/url] pavsmaysp
ijkkbbxxx www.louisvuittonhandbagsdiscountsale.com qxxilurgu [url=http://www.louisvuittonhandbagsdiscountsale.com]louis vuitton handbags cheap[/url] bopigsces
tdxojcipw www.louisvuittononlineshoes.com tgwuruxuy [url=http://www.louisvuittonhandbagsdiscountsale.com]louis vuitton bags on sale[/url] oueixgewn
wifowcink www.newdiscountlouisvuittonhandbag.com yaooecztt [url=http://www.louisvuittonhandbagsdiscountsale.com]louis vuitton handbags on sale[/url] wfrwprgkp
caunagobm www.louisvuittonreplicbagsonline.com ceadkbuap [url=http://www.louisvuittonhandbagsdiscountsale.com]louis vuitton bags uk[/url] ogndvbqhn

Anonymous said...

Hi. I wanted to drop you a quick notice to precise my thanks.
Ive been following your weblog for a month or so and have picked up a ton
of excellent info and loved the strategy youve structured your site.
I'm making an attempt to run my very personal blog however I believe its too basic and I have to focus on a variety of smaller topics. Being all issues to all people will not be all that its cracked as much as be

My blog: having trouble getting pregnant at 40