Joel and Kathryn Friedman, aged 71, are eager to downsize from their large Southern California home but are held back by an estimated $700,000 capital gains tax. The current tax structure, unchanged since 1997, taxes home sale profits above $500,000 for married couples, impacting more sellers as housing prices rise. This situation has led to a shortage of family-sized homes, particularly in high-cost regions. Bipartisan efforts are underway to reform the capital gains tax, raising hopes for potential relief. The Friedmans listed their house for $4.5 million in May amid this uncertain environment.
"There are a million reasons why we'd like to move, but we're not because the tax is just burdensome," Joel said.
Since 1997, home sale profits over $500,000 (for married couples) and $250,000 (for single filers) have been subject to a capital gains tax of up to 20%.
Housing economists say that dynamic has exacerbated a shortage of family-sized homes on the market, especially in expensive places like California.
Growing desperate to move, the Friedmans finally put their house on the market in May for nearly $4.5 million.
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