A Boring Dystopia

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This boomer couple would be hit with $700,000 tax bill if they sold their mansion (www.businessinsider.com)

submitted 4 days ago by DrunkEngineer@lemmy.world to c/aboringdystopia@lemmy.world

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Joel and Kathryn Friedman, both 71, are counting the days until they can sell their home and move into a 55-plus community.

The retired empty-nesters have been ready to downsize for years, but are reluctant to sell their five-bedroom, 5,000-square-foot Southern California house [mansion] in large part because of at least $700,000 in capital gains taxes they estimate they'd have to pay.

Since 1997, home sale profits over $500,000 (for married couples) and $250,000 (for single filers) have been subject to a capital gains tax of up to 20%. That threshold hasn't changed since 1997, meaning that — between inflation and soaring home prices pushing an ever higher number of houses above that limit — many more home sellers have to pay the tax now than when it was first implemented.

The Friedmans are among a growing number of older homeowners discouraged by the tax from selling their valuable properties. Housing economists say that dynamic has exacerbated a shortage of family-sized homes on the market, especially in expensive places like California.

The Friedmans' house is too big for them, and maintenance costs are only rising, Joel said. "There are a million reasons why we'd like to move, but we're not because the tax is just burdensome," he said.

But that could change — there's bipartisan support in Congress for raising the federal tax threshold to boost home sales in a stagnant market.

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[–] NoneOfUrBusiness@fedia.io -2 points 4 days ago

Three million dollars is easily enough to support a couple their age for the rest of their lives.

If they already have a house, otherwise the math changes dramatically. In many parts of California the median house costs more than one million dollars, and a retired couple needs a little north of a million per decade to live with a "normal" quality of life in California according to Google. That's three million right there, before you get into any of the million things that could require significant sums of money a retired couple could face in their remaining 15 or so years of existence.

if three million dollars is too little to live on in California, they can move somewhere cheaper.

Why should they? Hell, why should anyone? If they want to stay in their home state, why should they be forced to leave? People have a right to live, and the fact that that right is denied to too many people is no excuse to deny it to everyone else.