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Temporarily embarrassed millionaires pt. 2
(sh.itjust.works)
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this post was submitted on 15 Jan 2024
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Agreed, but …
I’d argue this is too low. I do t know how long it’s been like that but doubt it has risen with inflation. It affects more people every year and arguably shouldn’t, and it is too much impact on people who own their house a long time
I live in a high cost of living area. Despite this being low percentage growth, my house has gained that much over the 20 years I’ve lived here. I suppose you could argue I should pay more but I’m certainly not wealthy. Maybe it wouldn’t hurt me too bad while I’m working, but…
what happens to someone retired after owning a house for decades. You’d easily gain more than this just by time. However now we have a trap of no income do can no longer afford taxes on your home and taxed take a bite out of selling, making it harder to pay for retirement, healthcare, nursing home
Any adjustment needs to be kind to the elderly, plus I’d argue someone like me is not the target so should not be affected
I'm on the fence here. Realistically, if you can show "normal" bills related to wear&tear and maintenance, that gets you out of paying taxes in even the most expensive parts in the country. I live outside of Boston and have never come close to owing a penny on selling my home.
So the problem is the paper trail, and a good real estate attourney can help you maneuver it. What have your expenses been on the house over the last 20 years? They all count. Profit isn't just "selling price minus buying price" in this situation. At least in my state.
That does get complicated. To my understanding, normally the law works reasonably well in situations like these, but I don't know all the nuances. It's a "lawyer-up" situation, especially if there's an estate involved. I'm sure there are edge cases, but largely people end up not owing taxes on their home residence even in very pricy areas, unless their gains on it are absurd. If you bought a Boston apartment building when it was cheap and sell now, then you're likely going to be paying taxes on some of that $5M+ windfall.
But is that realistic? Who would keep such things over potentially their whole adult life? Even knowing that, I replaced my roof about 5 years ago and already misplaced those receipts. I do t know how people do it
I'd ask a lawyer. I'm pretty sure estimated costs and maintenance averages can be applied. I've known people who have sold their life-long residences in MA and not a one that I know has ever had to pay a penny in taxes.
Only person I know who ever had to pay taxes on a house sale like that was a friend who suddenly came into a lot of money and chose to sell their house (bought way undervalue and sold for much higher) before the 2 year residency mark that would trigger homestead protections.
And remember, if your'e selling something for hundreds of thousands of dollars there's always financial crap you gotta figure out. You always want an expert on your side telling you like it is.