Do you binge-watch Flip or Flop and all the HGTV shows and now aspire to flip houses yourself? Then you'll want to know about the California Housing Speculation Act. Also called AB 1771, this legislation proposes a 25% tax on the capital gains earned if a house is sold within 3 years of purchase. Properties sold after 3 years would be taxed at 20%, and after 7 years that percentage would be zero. The money would then be distributed to different counties in an effort to create more affordable housing, fund school districts, and support community infrastructure.
This wouldn’t apply to first-time home buyers, homes used as primary residences or affordable housing units, homeowners active in the military, or to those selling a house after an owner’s death.
This act was basically written in an attempt to prevent real estate investors from driving up prices by buying properties in all cash, quickly renovating, and then selling them at much higher prices.
On the one hand, for the average buyer just wanting to be able to afford a home without selling a kidney on the black market, this might help. Although on the other hand, flippers are doing the dirty job that a typical home buyer would not and they are eventually adding inventory to a market in desperate need of them. If adopted, the tax would go into effect on January 1, 2023.
Also please don't sell any organs on the black market.
All things real estate.