With skyrocketing home prices during the pandemic (and no sign of them sowing down), a growing number of homeowners are owing taxes on excess capital gains beyond the exemption limits. And no surprise to most, California leads the nation with the highest percentage of home sales with capital gains about $500,000.
According to CoreLogic, in the fourth quarter of last year, 28.8 percent of all home sales in California were potentially subject to capital gains taxes. That’s up from an average rate of 13.2 percent in the state from 2017-2019.
For 2023 as a whole, almost 8 percent of U.S. homes sold last year exceeded the capital gains tax limit of $500,000. In 2017, 2018 and 2019, that number was about 3 percent.
Since 1997, homeowners can exclude housing capital gains for up to $500,000—or $250,000 for a single filer—when they sell their home.
Following California, the states with the highest share of home sales with appreciation over the $500,000 limit at the end of 2023 were Hawaii, Washington, DC, Massachusetts, Washington and New York.
Map courtesy of Realtor.com
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