A Boring Dystopia

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153

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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[–] Nomad 14 points 4 days ago

Normal rich folk give the house to their children to use and buy something in a retirement community with their children's support. None of their children live with them, kind of a red flag the author buried.

[–] ExLisper@lemmy.curiana.net 11 points 4 days ago* (last edited 3 days ago) (1 children)

I think that if you only own one property it would make sense to pay the tax on gains at the end of the fiscal year. If you sell $3.5m house and same year buy a smaller $2m house you only pay 20% of the $1.5m you actually gained. It's idiotic that simply moving somewhere can cost you 20% of your house value, even if you moved to house of equal value and haven't made any money.. If you own more then one property you pay 20% of the sale profit same as now.

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[–] gusgalarnyk@lemmy.world 1 points 2 days ago

It's just nice reading everyone ripping this article to shreds. Thanks for making my day brighter.

Taxes are a percentage of profit/income/wealth. If someone is getting hit with nearly a million dollars in taxes I would argue that likely means they need to be getting hit with even more taxes. We tax the wealthy too little practically everywhere in the world, and one doesn't get millions of dollars wealthy without systemic injustice - not even speaking about hundred millionaires and billionaires who should absolutely have 95% of their wealth taken away and redistributed to the public for the betterment of the species and the planet.

[–] AlecSadler@lemmy.blahaj.zone 11 points 4 days ago

It'd be funny if they died like a week after the sale closes and they move into the new community.

[–] anachronist@midwest.social 5 points 3 days ago

I know a way they could avoid those capital gains taxes...

[–] Alfredolin@sopuli.xyz 0 points 2 days ago

Im no fan of the .ml troop but this post deserve their presence. Shame they can't see/post here.

[–] paraphrand@lemmy.world 6 points 4 days ago

If taxes go down, prices can go up even more.

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