"Duane Flemming and his wife, Chris Currie, would like to downsize. The retired couple has spent 41 years in their four-bedroom house in a suburban community 30 miles east of San Francisco. The two-story home has gotten too big for them, and the stairs are more difficult to navigate these days. Plus, they'd like to avoid expensive renovations and upkeep. But Flemming, an 81-year-old retired veterinarian, is worried about the hefty tax they'd have to pay on their home sale profits."
"The tax can be as high as 20% of the profits over the threshold, and is determined by income. That doesn't include potential state taxes. Flemming estimates that his house has appreciated about $800,000 over the last four decades, and that he'd have to pay between $30,000 and $60,000 in capital gains taxes on his home sale. He worries that the remaining cash won't be enough to buy a new home and pay for rising long-term care costs on a fixed income."
"The share of home sales subject to the capital gains tax has more than doubled in the past few years, in large part because home values have soared. About 34% of US homeowners could exceed the $250,000 cap for single filers if they were to sell, and 10% could exceed the $500,000 threshold, the National Association of Realtors found in a 2025 report. That's up from 1.3% of US sellers in 2003 and 3% in 2019, the property data firm CoreLogic found."
An elderly couple wants to downsize because their four-bedroom, two-story home has become too large and difficult to navigate. Federal capital gains rules exempt only $250,000 for singles and $500,000 for married couples, with taxes up to 20% of profits above those caps and potential state taxes. Home appreciation can produce significant tax bills that reduce proceeds available for a new home and long-term care. Rapid home price gains have sharply increased the share of sellers who exceed the exemptions, with a substantial rise in affected homeowners since the early 2000s.
Read at Business Insider
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