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Call me crazy - however I think the new tax legislation around this weekend's passage of Health Care reform will eventually cause people to buy bigger homes. It's one of the few investments that will be excluded from additional tax provided the homeowner remains under the $250,000 capitol gains for a Single filer and $500,000 Married Filing Jointly when they sell a principle residence.

Investment income will move from 15% to 20% in 2011 in the highest tax bracket. Here in California you add 9.55% state tax on top of that. Then in addition you will add 3.8% medicare tax if your AGI is above $200,000 for a Single filer or $250,000 for Married Filing Jointly. Total it up any you get 33.35% capitol gains tax on all interest, dividends, rents, royalties, and property sales. The one exception is the sale of a principle residence provided your gain is less than the exclusion amount for your filing status.

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