Baby boomers complaining about paying capital gains tax......

[Boom Boom]

Boomers are not moving out of their big homes. Here’s why

After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

finance.yahoo.com

Are you kidding me? Buy a house for 100K in the 90s, sell it for 2M and complaining about paying 450K in taxes? Even with realtor fees and all that, that's a 9% investment over 30 years. And now you want more, just because you want to take advantage of big numbers?

The entitlement has reached a new level. I'm supposed to feel sorry for them for having to stay where they are?

It’s an antiquated law that needs to be revisited. And to automatically assume those people are that rich just because the value of their home is so outrageous is pretty ignorant. Caveat: I didn’t read the article so I’m not informed on the subjects, but there are people who aren’t in the 1% that are also victims to this tax. It’s a law written by the 1% to penalize those trying to achieve a better status, won in the RE market, and are now being penalized. Just because some people made a wise investment, they shouldn’t be subjected to the tax if they are turning around to make another home purchase.

If it was truly an investment property, then sure, tax away. But subjecting a homeowner who is either going to upgrade or downgrade? Nah, man. That’s actually greedy on the gubment’s part.

Maybe they should just stop eating avocado toast or something to make up the difference?**

But seriously, the problem that updating the tax break runs into is that most of the people wanting this increased tax break have concurrently benefited from other massive tax breaks.

The solution I think is a sort of back door means test of wealth. Give a total tax advantaged account max benefit of say $1M,maybe $2M, indexed for inflation (exempt gains within the account, just don't allow more tax advantaged contributions once above that threshold). Tie the home sale exclusion to that threshold. Tons of home equity, no 401k? No capital gains tax on sale of home. Both? **** off boomer, pay some tax for a change.

 

[mstateglfr]

If someone sells property and makes a profit, they should have X time to invest that money into property again before it is taxed. Land, house, whatever.
Call it 12 months for the time you have.


Buy another property in 12months that costs the same as or more than the profit you made on the sale of your old home?- no taxes paid.
Choose to rent/live with family/drive around the country like a rich hobo in an RV?- pay taxes on the profit.

 

[patdog]

Simple way to avoid this situation. When your unrealized gain approaches the max exclusion. Sell and move.

 

[mstateglfr]

Trust me, the tax code being what it is, you do not want to be rich right now.

I know right? Ugh, what a terrible time to be rich.**

 

[Thebulldogcountry1]

Trust me, the tax code being what it is, you do not want to be rich right now.

Tell me about it. I thank the good Lord every day I'm not rich.

 

[mstateglfr]

People who are wise enough to invest well should not be punished for being smarter than the rest. In fact, we should be giving them more tax breaks and let it trickle down to all the losers.

How are the people in the Yahoo article smarter than the rest? They just happened to live in an area where real estate prices have increased exponentially. If you want to claim they were smart to buy there, they would have bought land and other property decades ago and held it. They bought a house to raise a family...thats just living.

As for the last sentence, well its pretty on point that we are talking about a married couple that bought their house over 3 decades ago and you are repeating a failed economic approach from over 3 decades ago.

 

[Podgy]

The tax code is complicated. It's good to be rich knowing that it was written by educated wealthy people interested in protecting wealth in some rather creative ways. Just hire a CPA.

 

[Boom Boom]

I think you're the one who can't see between the lines. If an economic slowdown happens, that affects all investments. So no, you've been fortunate - not screwed over. Really unbelievable, the mindset you have.

And not sure what you're thinking about as far as a slowdown anyway, most agree that it's only the interest rates causing the slowdown currently. If they ever lower again, values are going up even further.

The part I'm laughing at is these peeps that don't have equity in the home thinking they're being screwed on "their gains". If you owned the home, you wouldn't be worried about mortgage rates on a downsize. And if the bank owns it, how is it "your gains"? I mean, I get that there's some ownership there, but it adds an extra layer of chutzpah.

 

[OG Goat Holder]

Goat you need to wake up and smell the flowers if you're shocked by Americans of any age group wanting "more". In case you haven't noticed we are all greedy Mofos .

I'm fascinated by the conservative hivemind's views on holding everything and everyone accountable, except when it comes to paying taxes.

And I also agree that the liberal's side comes from a 'well, you have it, I don't, so pay up' mentality.

I tend to side with the liberals on this one. I see nothing, absolutely nothing, that makes me feel sorry for people who have been extremely fortunate with their money or investments. Good for them, I say, but I better not hear you bltching about it. They get excited because they think they are about to cash in on some poor sap, then they find out there is a penalty and now they've been screwed over.

 

[dorndawg]

I'm fascinated by the conservative hivemind's views on holding everything and everyone accountable, except when it comes to paying taxes.

And I also agree that the liberal's side comes from a 'well, you have it, I don't, so pay up' mentality.

I tend to side with the liberals on this one. I see nothing, absolutely nothing, that makes me feel sorry for people who have been extremely fortunate with their money or investments. Good for them, I say, but I better not hear you bltching about it.

 

[OG Goat Holder]

The part I'm laughing at is these peeps that don't have equity in the home thinking they're being screwed on "their gains". If you owned the home, you wouldn't be worried about mortgage rates on a downsize. And if the bank owns it, how is it "your gains"? I mean, I get that there's some ownership there, but it adds an extra layer of chutzpah.

I hadn't even thought of that. I would hope that the people in this article have paid their home off by now, I mean it's been 30 years, even if they stuck to the long mortgage.

 

[Perd Hapley]

Boomers are not moving out of their big homes. Here’s why

After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

finance.yahoo.com

Are you kidding me? Buy a house for 100K in the 90s, sell it for 2M and complaining about paying 450K in taxes? Even with realtor fees and all that, that's a 9% investment over 30 years. And now you want more, just because you want to take advantage of big numbers?

The entitlement has reached a new level. I'm supposed to feel sorry for them for having to stay where they are?

Except those people in CA have been trapped by the golden handcuffs for decades.

I have relatives in CA who bought their house in the LA suburbs in the late 70’s. Normal middle class folks. Paid $80 ~ $100 k (which was a damn fortune for modest house 40-50 years ago), and had a sky high mortgage interest rate to boot.

Well as values of homes continued to skyrocket, they couldn’t ever move because of similar conditions as the past few years…..but instead of a temporary surge from a global pandemic, it was a continuos surge that is still happening now….50 years later. They would be paying way more, for way less house, in a worse area. Their income didn’t rise proportionally with the home value. So they got stuck. More years pass, the worse it gets. Yeah it sounds great that they get a windfall far in excess of $500k, but ultimately that doesn’t mean anything unless they leave their home area and move far away where home price increases have been far less pronounced. In their lives they’ve never made anywhere close to $450k total in a year, so they’d be getting stuck with a tax due that’s in excess of every dollar they made (BEFORE other taxes) in any given year.

That’s what’s the driver behind folks leaving the state of California. Nobody in the middle class can afford to move within their city or general area in California. So they leave the state, or they get carried out of their homes horizontally and their kids then have to deal with it. It’s a big problem.

Solutions should involve either a partial or full (income-based) waiver on the cap gains on real estate, a sunset period on the gains (cannot be taxed on any gains beyond the past 5 years, for example), and / or an elimination of any additional state cap gains taxes that are being levied (if any are in CA, in this instance). The tricky part is you can’t just roll out such reforms instantaneously….they have to be gradually applied over time to prevent a shock to the system that will just lead to more home buying and selling hysteria that will make the condition worse.

 

[rynodawg]

Simple way to avoid this situation. When your unrealized gain approaches the max exclusion. Sell and move.

In CA though, they were probably enjoying their Prop 13 property taxes of $1K per year. As soon as they buy another $2M house that goes up to $10K+.

 

[WilCoDawg]

If someone sells property and makes a profit, they should have X time to invest that money into property again before it is taxed. Land, house, whatever.
Call it 12 months for the time you have.


Buy another property in 12months that costs the same as or more than the profit you made on the sale of your old home?- no taxes paid.
Choose to rent/live with family/drive around the country like a rich hobo in an RV?- pay taxes on the profit.

Good golly! You’ve actually posted something sensible! WTG! Keep it up, junior.

 

[bolddogge]

Nothing changed in 20 years with regards to the capital gains tax, so I'm not sure how that wouldn't factor in to a "good plan executed to perfection". I completely get not wanting to pay a lot of taxes but it's not as though some surprise was sprung upon you. Hope isn't a plan.

This is only one piece of the plan. Other parts of the plan all went off without a hitch. Paid off home, cash flowed 2 kids thru State, and debt free. I'd say all the parts of the plan that I was in control of went perfect. The exemption amount is bound to change soon. It's past due given the current state of the market.

 

[bolddogge]

If someone sells property and makes a profit, they should have X time to invest that money into property again before it is taxed. Land, house, whatever.
Call it 12 months for the time you have.


Buy another property in 12months that costs the same as or more than the profit you made on the sale of your old home?- no taxes paid.
Choose to rent/live with family/drive around the country like a rich hobo in an RV?- pay taxes on the profit.

I can't believe I agree with you on something. You folks better get prayed up. The end must be near.

 

[57stratdawg]

Boomers really messed up a lot of stuff.

 

[Dawgg]

Trust me, the tax code being what it is, you do not want to be rich right now.

Absolutely untrue.

 

[ckDOG]

Good comments this thread. Exclusion is due for an increase to keep up with the spirit of the original benefit IMO.

That said, the example they gave is unrealistically simplified. The $100k home 37 years ago almost certainly has very significant additions/improvements invested which will bump the adjusted basis up significantly and lower the tax bill. Make sure you keep up with your records over the years so you aren't left with a tax bill larger than it should be.

 

[OG Goat Holder]

Except those people in CA have been trapped by the golden handcuffs for decades.

I have relatives in CA who bought their house in the LA suburbs in the late 70’s. Normal middle class folks. Paid $80 ~ $100 k (which was a damn fortune for modest house 40-50 years ago), and had a sky high mortgage interest rate to boot.

Well as values of homes continued to skyrocket, they couldn’t ever move because of similar conditions as the past few years…..but instead of a temporary surge from a global pandemic, it was a continuos surge that is still happening now….50 years later. They would be paying way more, for way less house, in a worse area. Their income didn’t rise proportionally with the home value. So they got stuck. More years pass, the worse it gets. Yeah it sounds great that they get a windfall far in excess of $500k, but ultimately that doesn’t mean anything unless they leave their home area and move far away where home price increases have been far less pronounced. In their lives they’ve never made anywhere close to $450k total in a year, so they’d be getting stuck with a tax due that’s in excess of every dollar they made (BEFORE other taxes) in any given year.

That’s what’s the driver behind folks leaving the state of California. Nobody in the middle class can afford to move within their city or general area in California. So they leave the state, or they get carried out of their homes horizontally and their kids then have to deal with it. It’s a big problem.

Solution should be a waiver on the cap gains on real estate for those under a certain income threshold, particularly retirees, and an elimination of any additional state cap gains taxes that are being levied (if any are in CA, in this instance).

These folks are retired most likely, why do they need to stay where they are? And if their house is worth 2M, that's what, 20K in taxes? That's breaking you?

 

[dorndawg]

This is only one piece of the plan. Other parts of the plan all went off without a hitch. Paid off home, cash flowed 2 kids thru State, and debt free. I'd say all the parts of the plan that I was in control of went perfect. The exemption amount is bound to change soon. It's past due given the current state of the market.

You're doing it the right way, no sarcasm. Great job.

This is a bit nosy, but being you brought it up: I'm curious what general area you bought in that has gone up 5-6x in 20 years? If you bought for under 200k or so, the 500k exclusion mostly covers you. If you bought for well over that, it's a very limited number of places in the country that have 6x'd in 20 years.

 

[Dawgg]

The tax code is complicated. It's good to be rich knowing that it was written by educated wealthy people interested in protecting wealth in some rather creative ways. Just hire a CPA.

See? That’s just the type of unfair burden the rich have to carry. If he was poor, he’d get to live the sweet life and use TurboTax.***

 

[Mobile Bay]

Because fiat money is broken, investors use assets like real estate, the stock market, fine art, etc. as alternate forms of money, specifically money's role as a store of value. This has resulted in a monetary premium in these asset classes.

The problem is that these assets are not good forms of money, even though they preserve purchasing power better than fiat money. What if you could achieve the same (or better) capital preservation as a rental property without having to:

• pay property taxes
• pay for repairs
• deal with tenants
• hold an illiquid asset (try selling your rental property by EOD)
• hold a non-fungible asset (1 house ≠ 1 house)
• pay high transaction fees (closing costs)
• hold an asset that is impossible to physically move (if you move states, you're selling your rental properties or dealing with managing properties from afar)
• buy a high minimum investment asset

As bitcoin adoption increases, it becomes a more and more realistic store of value alternative to asset classes like real estate. Compare:

• no property taxes
• no repair costs, minimal maintenance costs (replace a signing device every two years or so, rent a safe deposit box to store seed phrase, etc.)
• no counter-parties (assuming you self-custody and avoid products like ETFs)
• extremely liquid: trades 24/7; launched in 2009, bitcoin has already traded more hours than the S&P 500)
• fungible (1 BTC = 1 BTC)
• not difficult to find trading platforms that offer 100 bps or less trading fees
• can move any amount of value globally, instantly
• no minimum investment (you can buy $10 or $10 billion of bitcoin)
• I'm probably leaving out other advantages, but the above is a good starting point.

The primary advantage of rental property over bitcoin is cash flow. bitcoin doesn't have a cash flow. However, if you are looking for a store of value, the gains of bitcoin exceed those of real estate over the long term (5+ years), including real estate's cash flow.

As more investors figure this out, the monetary premium of real estate will flow to bitcoin. This is a good thing because the monetary properties of bitcoin are superior to real estate. It is also a good thing because it makes real estate more affordable for the primary use of real estate: putting a roof over your head! This is a very big deal for first-time home buyers who are competing to buy a residence with people buying a second, third, or fourth house.

Ill have what you are having.

 

[OG Goat Holder]

This is only one piece of the plan. Other parts of the plan all went off without a hitch. Paid off home, cash flowed 2 kids thru State, and debt free. I'd say all the parts of the plan that I was in control of went perfect. The exemption amount is bound to change soon. It's past due given the current state of the market.

If enough folks bltch about it, it likely will change. And I'm not against that, I'm just taken aback by the outrage over it. Is it possible, just POSSIBLE, that they are holding out with their "golden handcuffs" due to the hope that the exemption is going to change soon? Me thinks that might be it.

But I am also curious where you are, where your home value went up 5-6X in 20 years.

 

[DesotoCountyDawg]

If enough folks bltch about it, it likely will change. And I'm not against that, I'm just taken aback by the outrage over it. Is it possible, just POSSIBLE, that they are holding out with their "golden handcuffs" due to the hope that the exemption is going to change soon? Me thinks that might be it.

Or wait for the interest rate to drop. Thats what has my sister in law in a bind and she’s not rich.

 

[Boom Boom]

And I also agree that the liberal's side comes from a 'well, you have it, I don't, so pay up' mentality.

That's not the liberal view.

 

[SouthFarmchicken]

Boomers are not moving out of their big homes. Here’s why

After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

finance.yahoo.com

Are you kidding me? Buy a house for 100K in the 90s, sell it for 2M and complaining about paying 450K in taxes? Even with realtor fees and all that, that's a 9% investment over 30 years. And now you want more, just because you want to take advantage of big numbers?

The entitlement has reached a new level. I'm supposed to feel sorry for them for having to stay where they are?

They shouldn’t pay any tax. They’ve already been taxed multiple times on the money they bought the house with and paid it off with. Capital gain taxes are ludicrous in regards to real property.

 

[OG Goat Holder]

Or wait for the interest rate to drop. Thats what has my sister in law in a bind and she’s not rich.

What is her exact situation? If it is like @The Peeper, then he bought a bigger house farther out, that is worth the same as a smaller house closer in. So the only difference is the interest rate. Both properties go up or down in value. In that situation, sure I can see the logic in waiting for a lower rate. But if it's a house I really wanted, I would not wait on that. Marry the house, not the interest rate. If you have to move, you have to move, and you make it work. If you don't have to move, well, then you can afford to worry about such things.

It's not a bad situation or anything.

 

[OG Goat Holder]

They shouldn’t pay any tax. They’ve already been taxed multiple times on the money they bought the house with and paid it off with. Capital gain taxes are ludicrous in regards to real property.

If you buy stock, is it not the exact same thing? If you founded a company, is that not the exact same thing? Should we do away with those taxes too? And don't get into the weeds with LLCs and such, companies still pay taxes and somebody founded the company with after tax dollars.

I mean they already have an exemption. It's crazy that their value went up that far, they need to consider it a good day.

 

[DesotoCountyDawg]

What is her exact situation? If it is like @The Peeper, then he bought a bigger house farther out, that is worth the same as a smaller house closer in. So the only difference is the interest rate. Both properties go up or down in value. In that situation, sure I can see the logic in waiting for a lower rate. But if it's a house I really wanted, I would not wait on that. Marry the house, not the interest rate. If you have to move, you have to move, and you make it work. If you don't have to move, well, then you can afford to worry about such things.

It's not a bad situation or anything.

It’s just not financially feasible for her.

She bought a bigger house several years ago, at the time her mom, step dad, and three kids were all living there. Step dad has passed, mom is in very poor health (that’s what’s devoting her time and finances) and two of the three kids are out of the house. In that time housing values has increased significantly in the area and she doesn’t have a tremendous amount of equity so selling the house for a smaller one at a much higher value along with a new much higher interest rate doesn’t make it feasible. Trust me she has consulted with numerous people.

 

[Darryl Steight]

It's gotta beat struggling through the lower middle class.

As a wise man (I think it was Jamey Johnson) once said, "It's Lonely at the Top, but it's a B!tch at the Bottom"

 

[Darryl Steight]

If someone sells property and makes a profit, they should have X time to invest that money into property again before it is taxed. Land, house, whatever.
Call it 12 months for the time you have.


Buy another property in 12months that costs the same as or more than the profit you made on the sale of your old home?- no taxes paid.
Choose to rent/live with family/drive around the country like a rich hobo in an RV?- pay taxes on the profit.

So a residential 1031 exchange. Huh maybe so.

 

[ETK99]

Boomers are not moving out of their big homes. Here’s why

After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

finance.yahoo.com

Are you kidding me? Buy a house for 100K in the 90s, sell it for 2M and complaining about paying 450K in taxes? Even with realtor fees and all that, that's a 9% investment over 30 years. And now you want more, just because you want to take advantage of big numbers?

The entitlement has reached a new level. I'm supposed to feel sorry for them for having to stay where they are?

I'd say taxation by governments is out of control.
Seems like there was a revolt over that somewhere one time.
Oh, and don't buy/build in high tax areas. Plus, interest rates in the 6-7% range arent historically high by the way.

 

[pseudonym]

Ill have what you are having.

US House Price (priced in bitcoin):

• 1-year: -29%
• 5-year: -85%
• 10-year: -97%

💰House Price Median US 🏡 Price in BTC 🥇

House Price Median US 🏡 (the 🟢 green line) measured in BTC 🥇 (the 🔴 red line) to adjust it for inflation. See the effect of inflation on prices.

inflationchart.com

 

[pseudonym]

I'd really been missing the funny money brigade around here

I just ignore them.

 

[Darryl Steight]

A 20% capital gain tax is a huge tax break. The issue here is the limitation on gain exclusion for sale of your residence. Makes it hard to move without significantly downsizing if you're going to have to pay $450,000 in income taxes. It's hard to feel too sorry for someone sitting on a $1,900,000 gain on their house though.

"I'm truly sorry for your loss gain"

 

[SouthFarmchicken]

Gotta disagree with you there. I’d rather pay more taxes and be rich… any rich person here tired of being rich and want to give me your wealth and tax burden, I’m sure we can work something out.

I had/still have a genius idea for a tax marching app, that will work everywhere but in Mississippi and North Dakota.

With the elimination of traditional marriage in the civil code, you simply shop your projected tax partner yearly, and remarry yearly, acccording to your tax situation. Boom boom!

 

[bolddogge]

You're doing it the right way, no sarcasm. Great job.

This is a bit nosy, but being you brought it up: I'm curious what general area you bought in that has gone up 5-6x in 20 years? If you bought for under 200k or so, the 500k exclusion mostly covers you. If you bought for well over that, it's a very limited number of places in the country that have 6x'd in 20 years.

West TN. Just outside of Medina city limits. I beat the rush of folks getting out of Jackson to get to escape the Madison county school system. Found some acreage with a house. The owner married and moved to their spouse's house and was in a financial bind. I got a really good deal. About 800 people lived in the city limits when I moved. The flood of folks that followed me overloaded the district and they had to build replacement elementary and middle schools and add a high school. The high school that didn't exist in 2008 is now a 4A. The new schools were built about 3 miles from my place. The last number that I was given said there was about 5,200 people in the city limits. Given the sweet purchase price, acreage, proximity to the new schools, and improvements I added, I know I can get over 5X.

 

[GloryDawg]

I had/still have a genius idea for a tax marching app, that will work everywhere but in Mississippi and North Dakota.

With the elimination of traditional marriage in the civil code, you simply shop your projected tax partner yearly, and remarry yearly, acccording to your tax situation. Boom boom!

Just think if it was possible for a father and son to marry for pure estate tax reason and you could pass wealth to your child just like you pass it to your spouse.******

 

[Hot Rock]

Their expenses have gone up considerably in El Cerrito, I'm sure. Don't be a hater player, Goat.

People who are wise enough to invest well should not be punished for being smarter than the rest. In fact, we should be giving them more tax breaks and let it trickle down to all the losers.

You have to pay taxes on your earnings be it investing or working. Capital Gains is a tax break that is less than normal income taxes. How about lets make you pay income taxes on your investments to see how stupid that looks.

Besides, Trickle down economics do not work. That just creates an Oligarch society like Russian. You end up with a bunch of have's and have nots and no middle class. Reagan ruined the middle class.

I am boomer and I am very well off, younger generations won't fair so well, They can't buy a house with a years pay. My first house was 39,500 - 3 BR 2 Bath with carport and utility - cheap ranch style with an acre. You go see if you can buy one for what you make in a year while working in a grocery store like I was... bet you can't. Trickle down my ***.