It also made it easier to exclude capital gains from rental property, further pushing up the demand for housing.
In the early 1990s the capital gains tax on property was boosted to 90% and this was before a slew of other property exactions were piled on.
The firms hoped capital gains on shares and property would close the gap between the interest rates they had guaranteed and those they could earn on their bond portfolios.
Let me count the ways: income taxes, Social Security taxes, Medicare taxes, property taxes, capital gains taxes, dividend taxes, sales tax, gas taxes, payroll taxes, business taxes, inheritance taxes, gift taxes, tariffs, tolls, and excise taxes.
Fears of a property bubble that, if it burst, could create urban China's first widespread experience of negative equity prompted the authorities in Shanghai last week to announce a 5.5% capital-gains tax on the sale of property held for less than a year.
Section 206 provides a juicy capital-gains tax exemption for contributions of property for conservation, meaning wealthy environmentalists with extra acreage will be able to take a tax deduction for the appreciated property and have the environmental organization preserve it, adding to the value of the primary property.
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Higher property prices boost tax revenues directly, through levies on capital gains or on transactions (such as stamp duty in Britain).
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Upon the ultimate sale of the property, basis-adjusted profit is taxed at the current capital gains rate, typically lower than income tax.
Once bond spreads and property yields are low, there is no longer much scope for further capital gains.
But a good slice of the blame for the housing boom must go to the Howard government which, in effect, slashed the tax rate on capital gains to half the top rate of income tax, luring a mountain of speculative money into property.
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They don't have to include in income the rental value of their property--their dividends, if you will, from owning--and capital gains are pretty much exempt, too.
If the property has been held for more than one year, gains are taxed at favorable long-term capital gain tax rates.
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