https://www.wsj.com/personal-finance/home-sellers-capital-gains-tax-e00bade3?mod=hp_lead_pos11 TL;DR: If your house had a capital gains of over $500k, you'll pay tax for it. What it means: let's say you bought a house for $1M and decades later you sell it for $2M and buy a similar house for $2M, you pay income tax for the "profit" you made on the original house $380k
Better than paying for maintenance, property taxes, or dealing with tenants
Reading comprehension is an increasing lost art
The government loves taking shit huh
Can’t you just do a 1031 exchange?
Not on a primary residence
1031 exchange is tax deferral, you still have to pay the taxes on those gains eventually in theory. If you sell a primary residence you get 500k in gains tax-free, and any gains beyond that are taxable. So in the original example you’re profiting 500k tax-free and owe capital gains taxes on the remaining 500k. That’s only going to be 20% federal and whatever it is for state, so maybe 150k in taxes. Paying 150k in taxes for $1 million in gains seems like a pretty good deal to me.
Yes you get taxed on profit. This is life. The financial illiteracy on blind is insane considering how obsessed the site is about financial dealings.
“You” get taxed on profits. The vast majority of people and businesses in the US do not so don’t speak for everyone else
in many countries you are not required to pay for the "profit" if you buy another house within 12 months
This is one of the biggest tax loopholes and is actually an argument for selling houses. If you get close to 500k appreciation it's time to sell, buy something else and when it appreciates 500k, it's time to sell. You're always within the exclusion as long as you only do it once every 2 years.
Yeah you pay less tax, but moving my family every 2-5 years, remortgaging at potentially worse interest rates, and starting from scratch on home modifications seems like the dumbest idea ever. Id rather live in my dream home for 20 years and deal with taxes when I'm dead lol
There is no way around it. You pay broker fees AND 1.7% exercise tax depending on the state for each sale
thats true, but you can try to adjust the cost basis upward based on all improvement you make to the property over all those years as nothing was ever depreciated for tax purposes. be creative. and if you really got all those gains without making any additional investments, why shouldnt you owe capital gains tax? the 500K exclusion is a real benefit. but yes, I agree, that amount was set in a time where these extraordinary $ gains were limited to much smaller subset of the population.
What i don’t understand is why even that 500k limit exists? And why only for homeowners and not stock holders? People that contribute to growing the economy get dinged for 10s of dollars of profit. But somehow occupying space is nobler by 500k? ???
This is in place to promote buying houses more than investing in stocks. The capital gains waiver up to 500k is only for primary residence. The rule was put in place when home prices were much lower and 500k capital gains was enough to last a lifetime ownership of the house. Now we hit that limit within few years itself
it's because primary residence homeownership is not a pure investment.
Such dumb reporting. Like someone with a 1M+ home can’t set aside some of the sale proceeds for taxes. People that optimize their lives to avoid taxes bore the hell out me.
lol, optimizing to minimize taxes is basically financial planning 101. Go ahead, be a poor wage worker forever.
Paying taxes on a $500k profit is sOoOo sad 😔
"profit"? Buy a house for $1M, sell it for $2M. Buy another one for the $2M and then pay tax. It's a loss, not a profit.
This is like saying my $1M profit in Nvidia stock is a "loss" because I bought 6 Lambos afterwards 😂😂😂