Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

To: Ancesthntr; TexasCajun; nathanbedford
We studied this in our economics class in the 90s. That tax law was responsible for maybe the Savings and Loans fiasco (basically real estate bubble bursting) later on if I recall the class discussion. Trump was correct to be against it.

Reagan was wrong on this as he was wrong on amnesty.

20 posted on 04/20/2016 10:13:23 AM PDT by Trumpinator ("Are you Batman?" the boy asked. "I am Batman," Trump said.)
[ Post Reply | Private Reply | To 10 | View Replies ]


To: Trumpinator

https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

By enacting 26 U.S.C. § 469 (relating to limitations on deductions for passive activity losses and limitations on passive activity credits) to remove many tax shelters, especially for real estate investments, the Act significantly decreased the value of many such investments which had been held more for their tax-advantaged status than for their inherent profitability. This may have contributed to the end of the real estate boom of the early-to-mid 1980s as well as to the savings and loan crisis.

Prior to 1986, much real estate investment was done by passive investors. It was common for syndicates of investors to pool their resources in order to invest in property, commercial or residential. They would then hire management companies to run the operation. TRA 86 reduced the value of these investments by limiting the extent to which losses associated with them could be deducted from the investor’s gross income. This, in turn, encouraged the holders of loss-generating properties to try and unload them, which contributed further to the problem of sinking real estate values.

Mortgages and similar real property loans constituted a significant portion of S&Ls’ asset portfolios. Significant declines in the market value of real properties resulted in the erosion of the value of these institutions’ major assets.


21 posted on 04/20/2016 10:14:29 AM PDT by Trumpinator ("Are you Batman?" the boy asked. "I am Batman," Trump said.)
[ Post Reply | Private Reply | To 20 | View Replies ]

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson