Ever since France's newly elected president, Francois Hollande, announced he intends to levy a whopping 75 percent tax on the rich, the country's ultrawealthy have been putting their high-priced real estate on the market, according to a report by CNBC.
Before you get excited about picking up a Paris pied-a-terre for a pittance and living life as an expat, you should know that these are still multimillion-dollar homes. Even so, according to CNBC, wealthy interested buyers from the Middle East, Russia and China are sniffing around for a relative bargain. Before the tax was announced, luxury properties in the City of Light were hard to come by.
So the question is, would a higher tax on the wealthy here in the United States, as proposed by President Barack Obama, cause a similar reaction? "I think the issue here in the United States is not so much the tax rates as it is the possible deduction limits," says Kay Bell, Bankrate's tax specialist.
"Obama has made it clear he wants to go back to the PEP and Pease limits for the wealthy," she says. "PEP is the personal exemption phaseout for high earners. Pease (named for U.S. Rep. Don Pease) would return us to the limits on total Schedule A deductions for filers who make more than a certain amount."
Republican presidential challenger Mitt Romney has said he will limit some tax deductions, but hasn't specified which ones. He's mentioned that wealthy homeowners should not be given deductions for second homes, but hasn't announced an official position.
Tax breaks are an advantage for the wealthy, so would they dump their first or second homes if they lost those advantages? Maybe, says Bell. "Many really rich people don't mess around with mortgages; they just pay for homes. But they still pay property taxes."
The real estate market is also quite different in this country. Luxury properties are not as scarce as they are in Paris, so potential sellers might have a long wait for a buyer who can afford the high prices.
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