Sasha Chislenko wrote:
>
> At 10:24 AM 00/03/11, you wrote:
> >In a message dated 3/10/00 1:24:34 AM Central Standard Time,
> >sasha1@netcom.com writes:
> >
> > > What are the tax rules for exchanging houses?
> > > How about international exchanges?
> > > What are the barter-regulating laws in general?
> >
> >I'm no tax lawyer (perhaps THAT is the lowest form of life), but the US tax
> >system is designed -- in theory -- to "capture" income and capital gains from in-kind exchanges.
>
> 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?
Capital gains on home sales, so far as I know, are not incurred if the
money is re-invested back into real estate, if its a primary home, or if
you put that money into oil well exploration (wildcatting).
>
> 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 :-)
>
> (Maybe the govt. could also collect its duties in barter?
> For every 3 family members you would have to host one bureaucrat)
This all goes to what the IRS tried to institute a few years ago. They
tried to say that you could potentially be earning income on your house
by renting it out (if you were'nt living in it), so you are implicitly
enjoying that income by not charging yourself rent. If you lived in
Gregs house, and he lived in yours, charging each other no rent, the IRS
might claim you were earning an income on that house equal to the
marketable rent value.
So far as I know, the courts have thrown out this argument, and the
Taxpayer Bill of Rights explicity forbids the IRS to do this.
Mike Lorrey
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