To protect the value of American Homes, we need congress to enact a tax on the sale of homes based upon January 1 2005 Home Appraisal values.  (One of the few times I think a tax would actually be good for us.)

The main problem as I understand it that is causing the troubles with Banks and other Investiment Companies are the bad loans, they now own assets that have been devalued thus producing the loses that government has been bailing them out using our tax dollars.  My proposal will stop the slide in home values improving the balance sheet of all these trouble institutions saving us trillions in tax dollars bail outs.

How would it work, it is so simple I have wondered why those in power have failed to come up with it themselves.  If your home appraised or would have appraised for $300,000 January 1, 2005 or if your home was built after January 1, 2005, but today appraises for less than 85% of what it would have appraised if built on January 1 2005 then the tax would kick in.  Say your $300,000 home now apprases for $90,000.  Under this proposed act if someone were to buy your home for less than 85% of its January 1, 2005 apprased value the tax would kick in and the buyer would have the option of either paying a federal government tax equal to 75% of the difference of the 2005 appraised value and the price you have sold your home for or pay the seller 60% of that difference to avoid the tax. Paying the seller 60% of the difference would be a better option as it would be a savings of 15% to the buyer over paying the tax at a 75% rate and that option would put the 60% difference in the pocket of the seller and not 75% to the government.  it would push the value of your home back up, not to the $300,000 level but up to $216, 000 which is far better than the $90,000 that it is currently appraised at. Since all home owners trying to sell would be in the same boat, the tax should not cause a hardship to the seller and will actually improve their chances of selling at a price above current appraisal.  No one wants to buy a $300,000 home in a neighborhood where houses are selling for $90,000.  In a few years these homes will be slums if this isn't corrected.  And lets face it, it isn't that the home that sold for $300,000 January 1 isn't worth $300,000, if you were to try to build one today, you wouldn't be able to build it for $90,000, the problem is Americans are fearful to purchase a home fearing they will loose their jobs and loose their investment in their home and for good reason.

For my plan to work, the act must also require home appraisers to use this tax in their appraisal caclulations which would push up the value of those so called "toxic" assets on the books of AIG and Citigroup and others, so here is how it would look:

2005 Apprasial	$300,000.00
Current Appraisal	$90,000.00
Difference	$210,000.00
75% tax on the difference going to the feds when sold	$157.500.00
New loan value or modified appraisal value	$247,500.00
or the buyer can
Pay owner at least the current appraisal value	$90,000.00
Plus 60% of $210,000 difference and avoid the tax saving 15%	$126,000.00
New price or value of the home going to the seller	$216,000.00

As you can see if banks are forced to use the new modified appraisal value this pushes the value one can borrow to buy this home up above the current appraisal value of $90,000 so it is good for the buyer because now they can actually get a home loan and the seller can get closer to what his home is really worth.  As the home market recovers this law will actually go away on its own because people will once again have faith in the value of their homes and know our government isn't going to allow their home to fall in value so the price of homes will start going up. 

The purpose of this act is not to help a home owner who may be in trouble with their mortgage, the purpose of this act is to protect home owners who paid $300,000 for their homes, owes $275,000 and are still making their payments but the value of their home has declined to $90,000 because everyone around them is in trouble.  This act is to improve the balance sheet of investors who are holding homes that they have gotten back due to forclosures and help them sell the homes for more than current appraised value.  Everyone says we must wait for the bottom in the housing market to hit but this Act will create a bottom stopping the fall.  I believe this is why nothing our government has done has helped, they are working on the wrong end of this problem.  Spending billions and maybe trillions before we are through to try to fix this problem from the top will not do what this tax will do working from the bottom.  We must stop the slide of our home values to improve the housing market, help people with their mortages by making their homes worth closer to the 2005 value, and encourage those who might be thinking about turning their keys in because their home has lost so much more value than they owe on it to hang in there.   This is their life line.

This act will also be the one and only bill congress and our President has created that is for the average home owning American who is making their payments and not for the big banks or those who foolishly over bought and now can't pay their mortagage and unlike all the other bailouts this proposal does not costs the tax payer anything other than the normal costs the IRS expends to collect taxes. The revenue gained from those who might buy and pay the tax as oppose to those who will buy and pay the increased price to the seller to avoid the tax can be turned back to the local communities to help with tax revenue loss that our schools are certainly going to suffer. This plan is a win win for everyone.  So get on the phone, write letters, and send email and ask our President, Senator, and Represenative to create and make into law the Home Owner Protection Act.  Do it today.