The code includes an "exemption" from tax on the "additional imputed income".
They could drop the exclusion and we'd be paying taxes on money we don't actually recieve as income.
At least that's the way I read it assuming that is actually what the tax code says.
Then again, the passage on the tax is not sourced in this article.
Notice that you do not currently get to deduct depreciation, or operating expenses (power, gas, sewer, water, paint, mowing, trimming, mortgage, trash removal) from your income.
Let's say Congress went totally nuts and decided to go after imputed income from owning a home ~ they'd set the initial value of the property at whatever it is on the market today ~ and the net rental income would be determined the regular way ~ gross rental income less deductable expenses and depreciation.
For about 99% of the individually owned SFDs, condos and trailers in America you'd be showing a loss! Actually, every time a large scale analyis of the situation has been attempted by anyone, they come up with a negative number.
Many people imagine their home value, as it increases over the years due to inflation, surrounding higher quality growth, and all the good stuff, is a serious personal profit center but it's not.
Notice that you do not currently get to deduct depreciation, or operating expenses (power, gas, sewer, water, paint, mowing, trimming, mortgage, trash removal) from your income.
Let's say Congress went totally nuts and decided to go after imputed income from owning a home ~ they'd set the initial value of the property at whatever it is on the market today ~ and the net rental income would be determined the regular way ~ gross rental income less deductable expenses and depreciation.
For about 99% of the individually owned SFDs, condos and trailers in America you'd be showing a loss! Actually, every time a large scale analyis of the situation has been attempted by anyone, they come up with a negative number.
Many people imagine their home value, as it increases over the years due to inflation, surrounding higher quality growth, and all the good stuff, is a serious personal profit center but it's not.
If the Federal government ever began taxing this kind of "imputed income," smart homeowners would simply do what some of my associated have done: transfer the ownership of the home to a limited-liability corporation owned by the homeowner*, pay rent to the corporation, and have the corporation legitimately deduct every penny of repairs, insurance, etc. on the home when computing its "income."
The IRS would end up collecting less revenue in that situation than under the current scenario.
* One particularly creative guy I know has his entire family listed as shareholders in the limited-liability company that owns his home. They make a point of holding their annual shareholders' meeting in Orlando every spring ... and deduct most of the cost of their annual Disney vacation as a "business expense."