Re: ECON: Eliezer's calls (barter)

Date: Sat Mar 11 2000 - 13:32:46 MST

Sasha Chislenko, <>, writes:
> So if you and I bought houses in Bay Area 50 years ago for $30K apiece,
> and now want to swap them (while they have the estimated market value
> of $1M each), each of us will have to pay about $300,000 ?
> And for that, each of us would have to sell the house and move
> to some God-forgotten area like Boston?

I think the general idea of the barter rules is that the tax consequences
are supposed to be the same as if you did it for cash. So the result
would be the same as if you each sold your residences and then bought
the other.

There is a tax exemption to avoid paying taxes on the appreciated value of
your primary residence if you buy a new house of equal or greater value.
There is also a one-time lifetime exemption you can use for when you go
from a large family-raising house to a small retirement house. (I'm not
familiar with the specific details, this is just the general idea.)
So you might not actually have to pay taxes on an exchange like this,
or at least one of you might not.

> What if people swap "usage rights". I still "own" my house,
> and you owe yours, but we swap usage rights for them?
> - Shadow ownership of sorts. Same for everything else.
> You still "own" the groceries, I am just digesting them :-)

I think there is a lot of fine print in the tax regulations to try
to catch this kind of creative thinking. Things like how many days
you actually occupy a house, etc. No doubt much of this language was
inserted in response to people coming up with loopholes.


This archive was generated by hypermail 2b29 : Thu Jul 27 2000 - 14:04:53 MDT