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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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The entire argument comes down to "oh, those poor people, they have to pay their fair share of taxes on the huge amount of equity they've just earned". Seriously, the bias is disgusting.
Equity isn't money in your pocket, though, and just because the house is suddenly worth $1.5 million on paper doesn't mean they have extra money to pay their tax bill.
I know lots of people are bitter about the housing market but I don't think it's the fault of people who bought a home and just want to live in it. The people (or corporations) who buy homes as investment properties or to flip them are probably more worthy of anger.
I think you just argued against home ownership. The point in the equity is that it has a sustained value but is also non-fungible. The moment they sell the house, they will have all that cash to pay that tax bill. If they turn that equity into new equity (i.e sell one house and buy another) then they won't pay a single cent unless their earnings are greater than $500,000.
Also the people in the article DO NOT WANT TO LIVE THERE ANYMORE but will not sell to a family who does want to live there because they don't want to pay a little bit of taxes. And people wonder why everyone hates Boomers.
Don't have the money to pay the tax bill? Show me that math.
You buy a house for 300k, sell for 700k, you made 500k, that's 15% tax filed jointly on long-term property. But wait! There's more! You get to exclude the first 250k if it's your primary residence! So you're paying 15% on 250k. $37,500. Which is substantially less than income taxes.
They just sold the house and (assuming it was paid off) have 700k (less realtors fees, etc.) and absolutely could pay the tax. Even if it wasn't paid off, the capital gains would be reduced and they would owe less money. We've moved and sold 2 homes in the last 20 years, made capital gains on each sale, and paid the appropriate taxes because we aren't idiots and didn't piss the money away.
So tell me again how they don't have the "extra money to pay their tax bill"?
They took the worse couple in the article. They have the house since the 90s. They will pocket a big fat check, and they are angry that they have to pay taxes on that.
Cry me a river.
The article is explicitly about capital gains. It's not like they have to pay the tax before they sell it. Use the proceeds from selling to pay the tax. That's the whole point.
When they sell the asset, they need to pay the tax. Conveniently, at that point the sale provides the money from such the taxes should be paid.