03-14-2010, 10:54 AM
Thank you John. Ouch! I think that's a terrible idea. Sometimes people need to put their money somewhere for the short term. If the market happens to go up and they have a net gain after the buying and selling costs, why grudge them? No one is there to make up their loss when they sell in a down market and lose a chunk of investment money. It's not always "flipping." It could be that having a rental doesn't work out, or they want one somewhere else, or it's a vacation rental that's not profitable. Or the person just needs the money liquid again. Capital gains tax is enough without a penalty tax.