AB 1771: Another Tax on Homeownership

HOMEOWNERSHIP

A Part of Everyone’s Dream

Homeownership is a key part of the American dream. It allows families to build wealth and achieve the American dream. But homeownership comes at a cost: homeowners pay taxes on their income, savings, and​ of course, property tax​es! It is important that one pays attention to initiatives and what is on the ballot when it comes time to vote. This is especially true for homeowners, because many times what one votes for can have a direct impact on their taxes. 

Homeownership is an investment in your future; you’re building equity, which may one day allow you to buy a bigger home, buy a car, take a trip. But when you buy a home, you’re also investing in your community. Your home is an important part of the local economy.

If you haven’t heard, there’s Assembly Bill 1771 by Assembly member Chris Ward, which imposes up to a 25% tax on the gain from selling a home or other real property within the first 7 years of ownership, diminishing the freedom and/or even the financial ability to move or relocate, further restricting the housing supply, economic security and opportunity to grow wealth for new homebuyers.

The California Association of Realtors® strongly opposes Assembly Bill 1771.

Fixing and flipping houses is nothing new. It’s been around for quite some time, helping many Americans generate additional income. For the uninitiated, the process involves looking for distressed and undervalued properties and rehabilitating them to resell for a profit. Generally, this is beneficial for both buyers and sellers. For obvious reasons, sellers get to go to the bank with substantial profit. On the other hand, homebuyers receive properties that are in great condition, which saves them the hassle of working on its updates and repairs

The main objective of the CA flip tax bill is to disincentivize house flipping to give the average Californian home buyer a better chance at homeownership, but this bill as written can have a huge negative financial impact on those same people if they do sell within the first seven years.

There is still time before these get implemented, but be sure to read and evaluate the pros and cons. Below are some links for more information related to this bill and how it might possibly affect you.

Check out the links below to find out more about the bill, and how it might possibly affect you:

New CA Flip Tax to Discourage Speculation | Mashvisor

C.A.R. Legislative Update (car.org)