A significant number of homeowners in North Carolina will encounter unexpected capital gains taxes when selling their homes. 33.9% of standalone owners possess home equity beyond the federal exemption limit, with an additional 6.7% exceeding the $500,000 threshold for married couples. The capital gains exclusion remains unchanged since 1997, while home prices have surged over 260%. North Carolina imposes a flat 4.75% state tax on capital gains, compounding financial burdens, particularly for retirees, and creating a 'stay-put penalty' that hampers market activity.
The capital gains tax exclusion hasn't changed since 1997, but home prices have jumped more than 260% during that time, turning long-term ownership into a potential tax liability.
In North Carolina, the state taxes capital gains as income at a flat 4.75% rate, leading to significant tax bills for homeowners, especially for retirees and families.
Homeowners who have paid off their homes now face a home equity tax upon selling, which is causing many to reconsider moving due to the potential financial burden.
The phenomenon of 'stay-put penalty' is emerging, forcing older owners to hold onto their homes longer and keeping properties off the market, affecting first-time buyers.
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