23.9% of Homeowners in Connecticut Will Face a Hidden Home Equity Tax If They Sell
Briefly

Close to 25% of homeowners in Connecticut may unexpectedly incur capital gains taxes when selling homes due to rising equity that surpasses federal exclusion limits. Federal capital gains exclusion limits of $250,000 for individuals and $500,000 for couples have remained unchanged since 1997, which is problematic as national home prices have surged by over 260% during this time. Connecticut also taxes capital gains as ordinary income, amplifying the financial impact on sellers who may not be aware of their tax obligations until it is too late.
In Connecticut, nearly 1 in 4 homeowners could be subject to a costly surprise when they sell their home: a hidden home equity tax that eats into decades of accumulated value.
According to the National Association of REALTORS®, 23.9% of Connecticut homeowners have built up enough equity to exceed the $250,000 capital gains exclusion for individuals.
While Connecticut's housing market may not have spiked as dramatically as those on the West Coast, it has experienced steady appreciation over the past two decades.
The capital gains exclusion was originally designed to protect middle-class homeowners from being taxed on profits from selling their primary residence.
Read at SFGATE
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