Holding off the Glut from `Trading Down' the Capital-Gains Tax, Though Painful for Individual Home Sellers Whose House Values Have Soared, May Be Preventing the Collapse of the Urban Real-Estate Market

By Jack Lessinger. Jack Lessinger, a. professor emeritus of "Penturbia: Where Real Estate Will Boom After the Crash of Suburbia. ". | The Christian Science Monitor, August 18, 1992 | Go to article overview

Holding off the Glut from `Trading Down' the Capital-Gains Tax, Though Painful for Individual Home Sellers Whose House Values Have Soared, May Be Preventing the Collapse of the Urban Real-Estate Market


Jack Lessinger. Jack Lessinger, a. professor emeritus of "Penturbia: Where Real Estate Will Boom After the Crash of Suburbia. "., The Christian Science Monitor


A GROWING anxiety has gripped urban and suburban America. A fraying social fabric - evidenced by gang violence, hour-long commutes on endless freeways, and the environmental degradation of the nation's large metropolitan centers - is kindling a new wave of migration.

If current homeowners can afford to escape, the coming flight from suburbia will have enormous economic impact far beyond the temporary effects of the current recession. But middle-class homeowners are boxed in by the curious logic of speculation and the tax code.

Throughout the speculative 1970s and 1980s, California was the peerless paradise for players of the real estate trade-up game. The median California home price had appreciated from $23,100 in 1968 to a whopping $194,010 in 1990, the peak year - an increase of more than 800 percent. Homeowners enjoyed similar gains in the Northeast. But in 1992, the outlook is radically different.

Consider the situation of a Los Angeles couple I know. In 1971 they began their climb to suburban affluence by purchasing a modest home for $38,000. Rapidly rising property values allowed them steadily to trade up to more spacious residences. By 1990 they had parlayed their initial investment into $475,000, the peak value of their present home.

My friends would love to cash out, purchase another house in a more remote and more satisfying location, then invest the remainder of their profits to pay off long-accumulating debts. In fact, they've made a small down payment on an idyllic lot in Washington state as a first step toward their eventual escape to fresh air.

Trouble is, they can't afford to sell. After taking all allowable deductions, and after buying a less expensive house, their total taxable gain would come to over $150,000, requiring a tax payment of at least $45,000 - in cash. That's money they don't have. Like too many Americans, they borrowed against the prospective gains tied up in their home and spent the proceeds on great vacations in Europe, fancy parties, new cars. The good life. They thought the music would go on forever.

But the tune has changed. The precipitous fall of California real- estate values since 1990 cut the value of my friends' house from $475,000 to $380,000. They "lost" $95,000 in capital appreciation. If that mini-crash hadn't occurred, they would have paid $28,500 in additional taxes on the lost appreciation, but $66,500 of it would have been left over.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Holding off the Glut from `Trading Down' the Capital-Gains Tax, Though Painful for Individual Home Sellers Whose House Values Have Soared, May Be Preventing the Collapse of the Urban Real-Estate Market
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.