Reply to How to avoid capital gains tax on house sale

Forum Index » Money and Finances

Reply to "How to avoid capital gains tax on house sale"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous]I’m single and bought a house for 800k a few years ago in a neighborhood that seems to be increasing in popularity. If it goes up to 1.2 million, then I already exceed the 250k exclusion. If and when I sell, my LT partner and I plan to move to a lower COL area where houses costing 400k are bigger and fancier than what we want, and we plan to buy together with another 200k or proceeds from a previous sale on their home. 
I’m not sure there will be enough house there for me to roll it all into. 
What should my strategy be? We are considering marriage but planned to wait until my kids (prev relationship) are through college.

I have put some money into updates (hardwood floors, newer energy efficient fancy water heater, etc) but not enough to really affect the basis all that much.

The capital gains on home sales really bothers me because it [b]feels like a tax on savings [/b]as home prices rise along with COL.[/quote]

If I had $250,000 bank I’d get taxed on the interest.[/quote]

This is, frankly, also crazy, and I’m surprised more people don’t advocate for a change in this regard. You’re essentially just being taxed on inflation.

Right now, we supposedly have “high interest rates.” But the interest on cash is around 4.2%. Given that most middle-class people pay a marginal tax rate of at least 30% (say, 22% federal and 8% MD), the after-tax rate on cash is 2.9%.  For comparison, the most recent CPI figure showed a 2.8% increase YoY.

When interest rates drop even slightly, the after-tax return on cash will be below the inflation level. We should not be taxed “gains” that are simply inflation.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics