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Merlo
Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I was planning on selling my three-family home which I ...

Resolved Question:

I was planning on selling my three-family home which I have lived in for many years next year. My question is how soon can Barak Obama, if elected, repeal the current long term capital gains tax rate and would it be retroactive to January 1, 2009.
Submitted: 6 years ago.
Category: Tax
Expert:  Marvin,EA replied 6 years ago.
Hello and thank you for using Just Answer. If you sale you home now you can exclude from income up to $250,000 ($500,000 for married couple) gains from your taxes. Any gains over $250,000 ($500,000 for married couple) will be long-term capital gain and tax at a rate of 15%. Sen. Obama have propose changing the long-term capital rate from 15% to 25%.
Expert:  Merlo replied 6 years ago.

HelloCustomer

If elected, Barak Obama could not change the current long term capital gains tax rate until legislation was introduced into Congress and Congress then approved the measure, so that in itself would take some time. However, if such legislation were introduced and approved, it could be made retroactive to January 1st 2009 if congress chose to approve the bill with those terms. There is just no way to know for certain at this point what tax changes might be in store for the year 2009.

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Thank you.

Customer: replied 6 years ago.
Reply to Marvin,EA's Post: My question was how soon after he is elected can Sen Obama raise the long term capital gains tax and will it be retroactive to Jan. 1 2009.
Expert:  Merlo replied 6 years ago.

Hello againCustomer

Yes, I do understand what your question was. But as I explained, there is no way to put a time frame on when that could happen. He cannot change the tax law on his own. Any such legislation would have to be introduced to Congress, where it would have to pass both the House and the Senate and then it would go to the President for enactment. That in itself would take at least several months, BUT even if it does take several months, they can still make it retroactive to January 1, 2009. So it really would not matter how soon he does it, they could still make any increase in the capital gains rate effective for the entire year of 2009.

You asked if the capital gains rate was increased if it would be retroactive to January 1st, 2009, but there is no way to answer that question definitively at this point. If they do raise the rate, then yes, they absolutely can make it retroactive to January 1st, 2009 if Congress chooses to approve the bill that way. They may also approve an increase in the rate and have it be effective in 2010 or 2011. It is going to depend on how the legislation is written and how it is approved, but there is a definite possibility that any new rate could be made retroactive to January 1st, 2009.

So if you put off selling your home until next year, it is possible that you may be facing a higher capital gains tax rate at that time. This of course is also assuming that Obama is even elected. Also it is my understanding that if he is elected, he has not yet decided what the increase might be that he seeks for the long term capital gains, but he is talking about setting the new long term capital gains rate at somewhere between 20% and 25%.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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