A notable number of Oklahoma homeowners are exceeding the federal capital gains exemption due to significant home value appreciation. The 12% who surpass the $250,000 threshold and the 1.7% exceeding $500,000 face unexpected tax liabilities. As property values have risen more than 260% since 1997, traditional views of home equity as a safe investment are changing. The flat capital gains tax of 4.75% may not seem high, but combined with federal taxes, it erodes homeowner appreciation. This results in what is known as a "stay-put penalty" for those hesitant to sell due to potential taxes.
In Oklahoma, 12.0% of homeowners have exceeded the federal $250,000 capital gains exemption, putting them at risk for unexpected tax burdens due to rising home values.
Oklahoma's 4.75% capital gains tax, while lower than some states, combined with federal taxes, creates a significant financial impact on homeowners cashing out their equity.
Homeowners in desirable neighborhoods risk hitting capital gains thresholds as their home equity grows, leading to unintended tax liabilities that could undermine retirement plans.
The home equity tax has emerged as a hidden liability for longtime homeowners who face difficult decisions about selling their appreciating properties without incurring penalties.
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