Are Hoboken Condo Owners Really Coupon Clippers?
Categories: Hoboken Condos
During the Democratic candidate’s debate Tuesday night, Joe Biden said (empahsis added):
“Demonizing wealth … I talked about how you get things done. The way to get things done is take a look at the tax code right now. The idea, we have to start rewarding work, not just wealth. I would eliminate the capital gains tax,” Biden said, before immediately changing his tune. “I would raise the capital gains tax to the highest rate of 39.5%. I would double it, because, guess what? Why in God’s name should someone who is clipping coupons in the stock market make, in fact, pay a lower tax rate than someone who in fact is, like I said, who is a school teacher and a firefighter?”
His statement is a messy jumble. But most believe what he was getting at is a proposal to tax capital gains as ordinary income. Without getting into a debate about how or why to lessen the income gap, let’s just talk about capital gains. Joe is implying that the very, very rich (the coupon clippers) are the ones enjoying the relatively low tax rate on capital gains. But that ignores who might be hurt most were the low rate eliminated, i.e., were those gains to be taxed as ordinary income.
Think of the first-time Hoboken condo buyer who outgrew their little 1-bedroom condo when they met their mate. I know many, many of my past clients – some of them school teachers and firefighters – who worked hard, have good credit, pay their bills and saved money for a down payment, bought their first home. Some of those same hard-working people may have decided to keep their first condo as an investment and rented it out to have some additional income. When they needed a bigger place, they had to work hard, maintain good credit, make timely mortgage payments on the first property, pay for repairs, pay property taxes and still be able to save money for yet another down payment to purchase a larger apartment that would suit the needs of a growing family. Let’s say they later decide to move to the burbs – a common scenario in Hoboken. Now they purchase a house in Montclair or Morristown after working hard, paying their mortgage, paying property taxes, paying for repairs, maintaining good credit and saving for down payment number three. These people are not billionaires or coupon clippers. They are typically middle class wage earners, tax payers and savers who have figured out (or stumbled across) a way to accumulate wealthy by owning real estate.
Now maybe they are relocating far from Hoboken, or perhaps they are approaching retirement age, or simply no longer wish to have the responsibility that comes with being a landlord. Time to sell the properties which most likely have increased in value after all these years. Currently, they would pay tax on the profit at the capital gains rate which topped out at 20% in 2018. The tax on the same profit at the highest ordinary income rate would be 39% under current law. That’s just Federal. There are similar state tax implications. Taxing the gain at the higher rate would have a very significant effect on the bottom line of these property owners.
I have no problem with the ultra-wealthy paying their fair share – and they also benefit from low capital gains rates. But there are other areas, like the inheritance tax, deferred compensation, off-shore tax havens, the carried-interest loophole etc. etc. that are the domain of the extremely wealthy alone. The issue I have is with Biden’s proposal is what it would do to the people I have been dealing with for the past few decades, like those in the scenarios I described above. Why penalize and disincentivize one of the most powerful and effective ways to accumulate wealth for ordinary folks? Tax law is tricky and changes to it often result in ancillary effects that politicians have not considered. Hearing talk of doing away with capital gains, regardless of how jumbled Biden’s statement was, jump out at me as a poorly considered solution to a problem that goes way beyond the capital gains tax rate.
| Currently 5 Comments »
The Hoboken Weekly Wednesday Wrap Up for the Week Ending October 16th
Categories: Hoboken Condos
Week ending Oct. 16th, 2019
- 256 active Hoboken listings
- 231 Condo & Co-op listings
- 26 Single-family and Multi-family
This Week’s Residential Property Sales & Activity:
- 13 Pending (Deposit Accepted By Owner and Under Contract)
- 18 sold
- 28 New
- 14 Price changes
Studio & 1-Bedroom Properties
6 New
5 Pending.
- 512 1st St #4, listed 10/2 for $379k.
- 100 Clinton 5C, listed 5/31 for $399k.
- 128 Garden #3, listed 10/1 for $400k.
- 228 Bloom #3, listed 9/24 for $430k.
- 1025 Maxwell 1009, listed 9/11 for $775k.
3 Sold
- 1107 Wash #4, listed 7/20 for $475k, sold for $468k.
- 725 Jeff #43, listed 7/8 for $490k, sold for $485k.
- 729 Madison 1F, listed 8/8 for $550k, sold for $541k.
2-Bedroom Properties
18 New
7 Pending
- 151 2nd St. 3D, listed 9/18 for $519k.
- 1110 Park 4R, listed 9/30 for $575k.
- 701 Park #2, listed 9/3 for $599k.
- 1012 Park #6, listed 9/6 for $620k.
- 66 Monroe #6,listed 10/2 for $630k.
- 1100 Clinton 304, listed 9/24 for $769k.
- 1331 Grand 406k isted 9/16 for $899k
6 sold
- 115 Willow 4L, listed 7/2 for $425k, sold for $417k.
- 744 Park 1R, listed 8/23 for $699k, sold for $699k.
- 904 Jeff 2E, listed 7/31 for $720k, sold for $715k
- 800 Jackson 508, listed 4/29 for $775k, sold for $754k.
- 1110 Hudson 1N, listed 7/17 for $799k, sold for $780k.
- 213 Clinton #2, listed 8/22 for $900k, sold for $900k.
3-Bedroom & larger Properties
4 New
1 Pending.
- 1100 Maxwell Lane #233, listed 9/3 for $1.5mil.
8 Sold
- 81 Monroe #2, listed 5/9 for $750k, sold for $725k.
- 1115 Willow 508, listed 8/8 for $799k, sold for $799k.
- 1023 Wash #3, listed 8/15 for $999k, sold for $975k.
- 70 Monroe #4, listed 7/8 for $1.4mil, sold for $1.365mil.
- 1500 Hudson 10F, listed 4/5 for $1.73mil., sold for $1.73mil.
- 1125 Maxwell 708, listed 6/6 for $1.9mil, sold for $1.81mil.
- 407 Jeff #2, listed 3/11 for $2.1mil, sold for $1.95mil.
The information provided in this private transmission is only for the personal, non-commercial use of you, the consumer. It may not be reproduced or distributed in any manner. It may not be used for any purpose other than to identify prospective properties you the consumers may be interested in purchasing or renting.
Sales numbers rounded up for convenience. Information is deemed to be reliable but not guaranteed.
| Currently No Comments »
The September Hoboken Condo Sales Results
Categories: Hoboken Condos
| Currently No Comments »