I just got burned on my taxes so I'm a little bitter about this.....

God bless America!

I am not surprised.  It is just another notch in a long list of abuses that happen with loop holes from throwing money at problems.  the Feds are just too big and unwieldy to administer that much money on a local level, and the local governments just dont seem to care for the most part.

And they are still moaning about Katrina.  Talk about looking a gift horse in the mouth!

Exactly. 

It is just another notch in a long list of abuses that happen with loop holes from throwing money at problems.Exactly.

I second that!

hmmmmmm I Wonder if I can transfer enough funds to make a profit on this?

"The GO Zone contains a variety of tax breaks designed to stimulate construction in Mississippi, Louisiana and Alabama. It offers tax-free bonds to developers to finance big commercial projects like shopping centers or hotels. It also allows real estate investors who buy condos or other properties in the GO Zone to take accelerated depreciation on their purchases when they file their taxes."

"The tax break is not available to people who buy a home for their own use."

1. Tax free bonds just allows the developer to borrow money at a lower cost, which is a great way to get them in there.
2. A home bought for your own use is not depreciable anyway, so you can't accelerate the depreciation. Also, when these condos are sold, they will have capital gains tax on them.

Neither of these tax breaks really should apply to those who buy a home for their own use. Should there be a tax break for people to buy their own home? Well, there already is. Beyond that, though, I don't think there should be any advantage for buying your own home there. People will move in if they want to. But without those developers, there would be nothing there when they got there.

so you buy the home with the idea of renting it out.

Absolutely. Accelerate the depreciation!

Form a corporation and rent it to yourself.

And the biggest reason a flat tax will never happen here.

I am not into polemics here. I know full well that this is not a vigorish issue. That is why I called it a loop hole. It was intended for one purpose, and could be used exclusively for that purpose with tighter controls. But then when you throw money at the problem (and that is what it is since the bonds are subsidizing the normal cost of business), there are going to be loop holes and excesses. This counts as both.

As I've said elsewhere, the tax code is not just for the purpose of taking your money and funding projects - the code itself shows society's priorities, and encourages/discourages certain things. Like it encourages going to school, buying a house, having children, etc. Doing it just for tax purposes is not financially sound, but it encourages you to do it because the financial cost won't be AS much as if there wasn't an exemption, or a tax break, or a tax credit.

well, I have to concede the point about depreciation and capital gains...as I discovered when we sold our rental property last year. And I do know that it serves a purpose to bring investors into an area they normally would avoid, BUT

This particular case is a blatent loophole and

I'm still bitter about the darn captial gains tax that burned us....grrr.

That's the problem with investing in rental real estate - you depreciate the property, and sell it for more money... you gotta pay up. But at least you didn't have to pay taxes the previous years, right?

If I take one citizen's dollars at gun point, that is theft....if congress takes it with a fountain pen, it is a tax.

But at least you didn't have to pay taxes the previous years, right?

You do pay taxes...and when you sell, they hit you up for every dollar that you "saved" in depreciation. It's called capital gains tax. So the house we sold because we were stuggling to keep it rented looks like a $50K profit, when it actually lost us money and we broke even when we sold it.