CALIFORNIA BILL SB 1771 WILL TRY TO STOP “HOME FLIPPING”

A bill that would massively tax house flippers and speculators who buy and sell a house within three years was moved to the Assembly Committee on Revenue and Taxation earlier this week.

Remember BILL SB 1070 FORECLOSER BILL THAT PASSED LAST YEAR: Tenants, affordable housing groups, and local governments will soon get their first crack at buying foreclosed homes in California. A bill approved Monday, Sept. 28, 2020, by Gov. Gavin Newsom is designed to keep corporations from snapping up homes and letting some fall into disrepair as they did during the Great Recession. SB1079 gives the state of California the first right of refusal to purchase foreclosed homes at the trustee sales! HOW DO YOU THINK THAT IS GOING TO WORK OUT?

Why THIS IS A BAD IDEA:

* California has a 35 billion dollar surplus! SO NOW WE ARE GOING AFTER MORE TAXES!

1. The bill may ease pressure on buyers, it
would limit options for sellers. He said
most institutional investors target mid-
price housing rather than luxury homes,
so the sellers most impacted would be
middle-income homeowners rather than
the wealthy.

2. it’s effectively an attack on the
property rights of sellers,

3. bill could inadvertently reduce
geographic and economic mobility by
restricting people from selling a home
because of a job change or other
economic necessity. this will constrain
supply and constrain people’s choices
about what job they take and where they
locate,”

4. Lowering fees and reducing regulatory
barriers to housing construction would be
more effective at curbing prices.
Regulations are killing us in California.
Set us free!

5. The real issue is a supply issue! We
don’t have enough homes for sale,
inventory is low and anyone thinking of
selling their home just won’t sell their
home; they’ll figure out how to hold onto
it. Botton line-more homes need to be built.

6. This is just another way to stifle
entrepreneurship and give the state more
money! Seems like California is trying to
take over real estate.

7. It gets rid of mom-and-pop house flipping companies that renovate for generally smaller profits and allows only the large firms to come in and sit on the properties.

8. Many cash buyers are not investors, that many house flippers renovate properties that would have otherwise made them unmarketable, and that local investors would be pushed out for larger investing firms who could easily take the 25% tax if passed, decreasing the housing supply even further......BLACKROCK!!!!!!!

9.. Kills tens of thousands of construction jobs

A bill that would massively tax house flippers and speculators who buy and sell a house within three years was moved to the Assembly Committee on Revenue and Taxation earlier this week.
Assembly Bill 1771, authored by Assemblyman Chris Ward (D-San Diego), would impose a 25% tax on all net capital gain from the sale or exchange of homes or properties. While the tax may be reduced if significant time has passed, those qualified taxpayers who buy and sell a house within 3 years would need to pay the tax. All revenue from the tax would go to the Speculation Recapture Community Reinvestment Fund.
The bill, also known as the California Housing Speculation Act, would also take effect immediately as a tax levy for all taxable years beginning in 2023. As AB 1771 would result in a tax change, 2/3rds of each house would need to approve for passage.
Assemblyman Ward wrote the bill to specifically target short-term investors who buy homes and other properties, keep them for some time, then sell them at a profit a short time later. This includes house flippers, who renovate properties to sell back, speculators, who often outbid other buyers in the hopes that home prices rise significantly, and cash-only buyers.
“Speculators are taking gobs of tens of millions of dollars out of our community through the cumulative effect of all these transactions. That’s not fair either because the people that are left struggling are people who get outbid 30 times trying to get into their home,” said Assemblyman Ward this week. “It would be an additional income tax on the profit gain from a sale that occurred within three years of the previous sale. But we’ve also seen this influx of short-term investors trying to get into the market, outbid San Diegans and Californians with all-cash offers, and drive the prices up for everyone. So, if somebody’s trying to go in there, fix up a fixer-upper and then sell it for record profits, that is distorting the market because somebody else could have gone in there, done the same, and kept the home.”

Ward also cites the California Association of Realtors’ quarterly index, who found that California’s median price for a single-family home increased 17 percent to $814,580 in the third quarter of 2021, while near-record lows of 42 percent of Californians could meet home-buying qualification standards.

If passed, AB 1771 would come into effect next year.