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0 pointstrollbridge1mo ago0 comments

I still haven't heard a solid explanation of how taxing loans as "income" is going to work.

Being able to borrow against assets is a pretty essential part of the present-day economy. Almost everybody does it, from the very poorest taking out a car-title loan (however ill-advised) to middle-class people with home equity loans to medium sized businesses and farms who often have loans against their entire assets in order to buy more equipment or keep their operations going.

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bhelkey1mo ago

> I still haven't heard a solid explanation of how taxing loans as "income" is going to work.

The idea is that taking a secured loan out using an asset as collateral would be a taxable event for that asset.

That is to say, if you buy a house for $400,000 and it appreciates to be worth $850,000 then take a home equity loan out against the house, you would owe capital gains on the $450,000 appreciation.

With the current $250,000 capital gains exclusion for primary residence, this would result in ~$30,000 of capital gains tax.

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