Homeowners in West Virginia, despite affordable housing, may encounter unexpected tax burdens due to rising property values. About 6.8% of homeowners exceed the federal capital gains exemption, exposing them to a 'hidden home equity tax.' The federal exclusion has remained unchanged since 1997, permitting only up to $250,000 profit from taxes. Average gains above this are substantial, burdening long-term owners with significant tax liabilities. West Virginia's treatment of capital gains as regular income further exacerbates these financial pressures, affecting many homeowners' plans for retirement or relocation.
According to the National Association of REALTORS®, 6.8% of homeowners in the state now exceed the federal capital gains exemption, which subjects them to hidden home equity tax.
The federal capital gains exclusion allows homeowners to shield up to $250,000 in profit from taxes when selling a primary home, but caps haven't changed since 1997.
In West Virginia, the average gain above the $250,000 cap is $66,805, leading to significant tax burdens for long-term homeowners in appreciating markets.
West Virginia treats capital gains as regular income, adding an extra tax burden of up to 6.5% on gains above federal thresholds, impacting equity for retirees.
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