- cross-posted to:
- urbanism@hexbear.net
- leopardsatemyface@lemmit.online
- cross-posted to:
- urbanism@hexbear.net
- leopardsatemyface@lemmit.online
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.
Both over 70, the Dragos are empty nesters, and like many of their generation, they’re trying to figure out how to downsize from their 3,000-square-foot, five-bedroom home.
“We are here in a huge house with no family nearby, trying to make a wise decision, both financially and for our well-being,” said Dragos, a retired teacher.
But selling and downsizing isn’t easy, appealing or even financially advantageous for many homeowners like the Dragos family.
Many Boomers whose homes have surged in value now face massive capital gains tax bills when they sell. This is a kind of tax on the profit you make when selling an investment or an asset, like a home, that has increased in value.
Plus, smaller homes or apartments in the neighborhoods they’ve come to love are rare. And with current prices and mortgage rates so high, there is often a negligible cost difference between their current home and a smaller one.
Yeah. I’m not hating on these people, but they would have $1.4 million in taxable income, and 37% would be owed as taxes, leading them around 900k. If they planned it over a few years they could actually avoid some of that.
So I don’t know their situation, but walking away with $882k doesn’t leave you without options.
Edit: I forgot that you only pay the normal income rate on assets held for a short period, so they would have $1,620,000 after taxes.