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Message
Trump floats idea of depreciation for personal residences
Posted on 1/21/26 at 11:07 am
Posted on 1/21/26 at 11:07 am
quote:CNBC
President Donald Trump on Wednesday floated the idea of allowing depreciation — a yearly income tax deduction to recover certain property costs over a set period of time — for personal residences.
“The crazy thing is a person can’t get depreciation on a house, but when a corporation buys it, they get depreciation,” Trump said during an address at the World Economic Forum in Davos, Switzerland. “Okay, here’s something we’re gonna have to think about.”
However, it’s unclear how that idea might come to fruition, and whether the proposal has Congressional support amid other legislative priorities.
11
Posted on 1/21/26 at 11:14 am to bigjoe1
It makes perfect sense.
Posted on 1/21/26 at 11:24 am to bigjoe1
What happens when that home is sold and it’s fully depreciated? Mark to market and a huge cap gain?
Posted on 1/21/26 at 11:25 am to bigjoe1
I love how Trump throws this kind of common sense stuff out there. Makes you wonder why nobody else ever thinks of it or has the courage to put it out there. I could give a gigantic list.
This post was edited on 1/21/26 at 11:26 am
Posted on 1/21/26 at 11:25 am to bigjoe1
I'm sure this would make the gains when you sell taxable, which currently have an exclusion of up $500,000 for a married couple.
Would be interested to hear more.
Would be interested to hear more.
Posted on 1/21/26 at 11:25 am to bigjoe1
Love this idea.
Posted on 1/21/26 at 11:28 am to Mid Iowa Tiger
quote:
What happens when that home is sold and it’s fully depreciated? Mark to market and a huge cap gain?
You die. Your kids enjoy a step up in basis. They sell the home. Zero taxes.
Would open the door for a whole lot of tax law changes.
This post was edited on 1/21/26 at 11:29 am
Posted on 1/21/26 at 11:30 am to bigjoe1
quote:
depreciation — a yearly income tax deduction to recover certain property costs over a set period of time
I never really understood that.
Posted on 1/21/26 at 11:32 am to SLafourche07
quote:
I'm sure this would make the gains when you sell taxable, which currently have an exclusion of up $500,000 for a married couple.
Not if it is exchanged for a new property.
Posted on 1/21/26 at 11:33 am to OysterPoBoy
Never had a property depreciate. Always goes up so state can get more property tax.
How does depreciation happen?
How does depreciation happen?
Posted on 1/21/26 at 11:35 am to bigjoe1
As long as depreciation recapture nets against the cap gain exclusion, I'm not sure why this has never been implemented to date. This would get higher priced homes out of the exclusion more quickly which could "tax the rich" but also offer them an offset for depreciation that works as a tax benefit. Or just allow mortgage payments to be deductible by electing out of the exclusion.
Side note - its bullshite that you need to report a capital gain on a personal residence but cap losses are not deductible. Its the biggest item that most people deal with that goes against the entire "personal in nature vs business" concepts in the tax code. If I move somewhere for a year, decide I don't like it, if I sell that home at a gain, I am taxed on it, but if I sell at a loss I get no tax benefit. On top of that, the deductibility of the interest may or may not be applicable because its an itemized deduction.
Side note - its bullshite that you need to report a capital gain on a personal residence but cap losses are not deductible. Its the biggest item that most people deal with that goes against the entire "personal in nature vs business" concepts in the tax code. If I move somewhere for a year, decide I don't like it, if I sell that home at a gain, I am taxed on it, but if I sell at a loss I get no tax benefit. On top of that, the deductibility of the interest may or may not be applicable because its an itemized deduction.
This post was edited on 1/21/26 at 11:40 am
Posted on 1/21/26 at 11:37 am to TSS4LSU
quote:
How does depreciation happen?
Basically, taking a deduction from your basis. The property still appreciates in value.
Posted on 1/21/26 at 11:41 am to OceanMan
quote:
Side note - its bullshite that you need to report a capital gain on a personal residence but cap losses are not deductible. Its the biggest item that most people deal with that goes against the entire "personal in nature vs business" items in the tax code. If I move somewhere for a year, decide I don't like it, if I sell that home at a gain, I am taxed on it, but if I sell at a loss I get no tax benefit.
Well this gets into the nature of the asset. Permitting capital losses would require removing things like the exclusion on taxing the gains. If we treat homes as pure investment vehicles, then they have to be treated this way across the board. This applies to Trump's depreciation scheme, too.
I don't think that's a trade off most people would support, especially given how ingrained in the culture that exclusion is, today.
Posted on 1/21/26 at 11:46 am to bigjoe1
Impractical. Good luck tracking recapture or auditing that. 121 exclusion is way more practical.
Posted on 1/21/26 at 12:13 pm to Mid Iowa Tiger
quote:
What happens when that home is sold and it’s fully depreciated? Mark to market and a huge cap gain?
homeowner to grab ankles..
Posted on 1/21/26 at 12:17 pm to bigjoe1
We damn well should.
Posted on 1/21/26 at 12:19 pm to bigjoe1
I don't care how much this would help me personally. Orange. Man. Bad.
Posted on 1/21/26 at 3:35 pm to SlowFlowPro
quote:
Permitting capital losses would require removing things like the exclusion on taxing the gains.
There is (generally) no exclusion if you own the home for less than 2 years, whereas there is no capital loss. Which was my point. The exclusion has additional limitations, namely the overall cap on the exclusion itself. On the flip side, personal casualty losses have multiple limitations.
quote:
Well this gets into the nature of the asset...If we treat homes as pure investment vehicles, then they have to be treated this way across the board.
As I said, the taxability of the gain on a personal home should have no limitation, if the nature of the asset is personal. The entire tax code has limitations on deductions because the expense is "inherently personal"...a personal home is not deductible for this reason, but the gain only has an exclusion on taxability (its all reportable as a gain). That is the IRS giving conflicting treatment using their own language.
quote:
I don't think that's a trade off most people would support, especially given how ingrained in the culture that exclusion is, today.
You haven't made this tradeoff very clear or explicit, what do you mean? Depreciation for full capital gain and loss treatment? After selling expenses and basis increases via improvements, that's a tradeoff the US Treasury doesn't want to accept, which is why the guidance is written the way it is. The exclusion is not some sort of gift.
Posted on 1/21/26 at 3:37 pm to bigjoe1
If the goal is to get PE out of the market then don't allow corporations to depreciate family homes.
Posted on 1/21/26 at 3:46 pm to Gee Grenouille
^^^ Ding! Ding! Ding!
This post was edited on 1/21/26 at 3:47 pm
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