When a person moves house, the proceeds from the sale of the old house are used to buy the new house.
If someone has lived in an area for a long time, wants to move across the street to an otherwise identical house with the same value, why should they be taxed for that move but not for simply living in the first house?
This is exactly what happens. If you buy house #2 within 90 days, you can do a 1031 (I think?) property exchange. Then you don’t pay taxes on the first sale.
1031 exchanges are not available to homeowners, they are exclusively available for investment properties. Homeowners receive a $250k/$500k tax shelter as discussed above.
Investments of all kind receive generous tax breaks even when they're simple rent seeking.
So you get the triple whammy of unaffordable prices with unaffordable rents with downward pressure on wages - because the rent-seeking behaviour of share holders is privileged over the value of the work that underpins it.
It's not just a recipe for economic disaster for most of the population, it's also a recipe for political instability. In a democracy everyone should feel like the system is working in their interests.
When essentials become unaffordable and pricing becomes punitive and extortionate, people get angry and start to act in insane ways.
The $250/$500k is a one-time benefit and you will absolutely take advantage of it when you sell your home.
The idea of taxing this "profit" for the home owner would be insane. The investment and re-investment in real-estate drives a big majority of the economy.
I'm for modifying 1031 for investors who rent their properties. \
For a 1031 exchange you can only exchange an investment property for another investment property. You cannot use it for your primary residence. You have 45 days after close of escrow on your sale to identify up to three properties to purchase. You then have 180 days from close of first property to close one of the three listed.
