Florida's housing market has significantly appreciated, resulting in many homeowners exceeding federal capital gains exclusion limits. Nearly 48% of homeowners surpass the $250,000 capital gains exclusion for single filers, and around 12% exceed the $500,000 limit for joint filers. The federal exemption, established in 1997, has not adjusted for inflation while home prices surged over 260%. As a result, many long-term homeowners are now liable for substantial federal capital gains taxes despite living in a state without a state income tax.
A federal capital gains exclusion rule from the 1990s is quietly hitting sellers in the Sunshine State with what economists call a hidden home equity tax.
According to the National Association of REALTORS®, 47.8% of Florida homeowners have exceeded the $250,000 capital gains exclusion allowed for single filers, and 11.7% have surpassed the $500,000 limit for joint filers.
Although Florida has no state income tax, the federal capital gains tax on home sales still applies, potentially resulting in substantial tax liabilities for long-term homeowners.
The current federal exemption, designed in 1997, allows sellers to exclude up to $250,000 in profit for individuals and $500,000 for married couples, but these caps haven't adjusted for inflation.
Collection
[
|
...
]