In Kansas, over 15% of homeowners risk incurring hidden capital gains taxes upon selling their homes, largely due to outdated federal exclusion limits that haven't been adjusted for inflation for over two decades. The capital gains exclusion allows individuals to exclude $250,000 and couples $500,000 of profit from taxes. With home values appreciating significantly, the tax burden affects even modest homes, potentially resulting in tax bills that undermine retirement savings and housing plans.
More than 15% of homeowners in Kansas face a hidden home equity tax due to outdated capital gains rules, with property values rising significantly.
The capital gains tax exclusion, established in 1997, still stands at $250,000 for individuals and $500,000 for couples, neglecting inflation adjustments.
Had the capital gains exclusion been adjusted for inflation, it would now exceed $660,000 for individuals and $1.32 million for couples.
Sellers in Kansas must consider the impact of capital gains tax on their retirement plans, with potential tax bills reaching into the tens of thousands.
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