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Boomers wanting to downsize face huge tax bills
(www.cnn.com)
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this post was submitted on 30 Jan 2024
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This is nonsense. The tax-free allowance is massive and they're only required to pay tax on all the free money, nothing they actually earned.
If there was 100% capital gains tax on all domestic property, we wouldn't have all that free money pushing up the cost of housing for everyone.
So assuming their house is worth $1M, they get $500k tax free and pay 14% on the remaining $500k, or $70k which comes out to 7% of the sale price. $930,000 doesn't seem like too bad of a haul.
I could be wrong, but "capital gains" to me means only on the increase in value. So if they bought the house for $200k, they would be paying tax only on the $300k.
I think that's accurate. I believe any improvements you've made can also be deducted from capital gains.
Not massive enough for how US home prices have ballooned. Even from 2016-2023, it looks like housing in El Cerrito have almost doubled from $750,000 to $1.1 million. If they bought 40 years ago, the gains would be even larger. FRED says housing prices nationally have 3x'd since 1970, which doesn't even account for localized price growth.
It is very easy to have a capital gain above $500k these days.
Definition of tax: https://www.nerdwallet.com/article/taxes/selling-home-capital-gains-tax
FRED data: https://fred.stlouisfed.org/series/QUSR628BIS
It's free money.