Joel and Kathryn Friedman, both 71, are counting the days until they can sell their home and move into a 55-plus community.
The retired empty-nesters have been ready to downsize for years, but are reluctant to sell their five-bedroom, 5,000-square-foot Southern California house [mansion] in large part because of at least $700,000 in capital gains taxes they estimate they’d have to pay.
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%. That threshold hasn’t changed since 1997, meaning that — between inflation and soaring home prices pushing an ever higher number of houses above that limit — many more home sellers have to pay the tax now than when it was first implemented.
The Friedmans are among a growing number of older homeowners discouraged by the tax from selling their valuable properties. Housing economists say that dynamic has exacerbated a shortage of family-sized homes on the market, especially in expensive places like California.
The Friedmans’ house is too big for them, and maintenance costs are only rising, Joel said. “There are a million reasons why we’d like to move, but we’re not because the tax is just burdensome,” he said.
But that could change — there’s bipartisan support in Congress for raising the federal tax threshold to boost home sales in a stagnant market.
Couple are set to make $3.5 million in profit, are asked to pay tax, say no and greedily hoard their asset some more and cry about the hardship.
Fuck off.
They should be asking themselves why they haven’t done more to give back to the society that gave them so much, but instead they’re whining about a meager 20% tax on staggering profits. Instead of lowering capital gains, it should be raised, over a certain threshold. Hell, we should be taxing the wealth they just have sitting around so that we can show wealthy people like these two shameful selfish pricks what it feels like to really contribute.
Make $3,500,000 in profit and you get upset that you have to pay taxes on your 3.5x return on “investment.”
If you can’t cover <$1M in taxes from the sale of your $4.5M home maybe you should live within your means or get a roommate to help cover the bills like a normal person or something.
There’s an alternative out, and one I think most people would object more to from a fairness perspective.
Selling their house means they lose out on a ton of the value, so don’t sell, rent it out and have the current tax code coddle you because the tax code heavily favors being a landlord rather than selling the house.
It’s busted that we actively encourage people to lock property up as investment because using a house you own is more expensive than not using a house you own.
They are soooooo poor 😭 😭 😭 i can’t contain my sadness over this unjust tax 😭 😭 😭 Their house is worth 🤑4,5 million dollars🤑, and they don’t want to 😡subsidize the state😡, that would be 👿evil socialism👿 ‼️ ‼️ ‼️
damn, i wish i had that problem.
I pay zero taxes if I were to sell my house. Because I don’t own a house, I can’t afford one. I’m forced to rent.
My boomer parents constantly complain their pension is shit. They have to watch their spendings, they tell me. They live in a big house, surrounded by water and nature (in the Netherlands, so expensive AF), with a sailing boat AND an expensive motorboat in front of their house, an SUV and caravan, they completely remodeled their garden including expensive fences, they go on holiday about 5 times a year, they got solar panels and heat pump installed, got a new kitchen, bathroom and toilet, expensive automated sun screens for all their windows (all around the house). But they are treated like shit with their poor pension. My dad bought his first house when he finished his studies, my mom never had to work anymore as my dad made more than enough to support a household of 5, we always lived in middle class neighborhoods, we went to private schools. But they complain they have to buy fuel to come visit me, so they rather have me visit them instead. I live in social housing and struggle every month paying my bills. They never gave me a penny as soon as I left the house as I’m a major disappointment, even though I’m financially and mentally struggling (autism, ADHD, PTSD). They even changed their will because I’m such a disappointment so I will get the bare minimum and my perfect younger brother gets almost everything even though he makes loads of money every month.
I don’t give a fuck. I don’t want anything from them when they die. I’m not complaining about not getting anything. I’m just complaining their love for me is measured in success and that they are privileged fucks who constantly complain about their sad rich lives while many others are actually struggling and they don’t give a fuck about them. They are an example of what’s wrong with society. I broke off all contact with them. Fucking boomers. They even turned full right wing racists even though their parents and grandparents fought in the resistance during the second world war and got deported and tortured to death by the nazis in concentration camps.
I guess all the boomer parents are like that. I have a really good relationship with my parents, but they wouldn’t help me out when my boyfriend and I bought a flat. Went as far as telling me that I’m trying to rob them, because maybe I can’t afford the flat and then the bank will take their houses. I told them the bank just can’t do that and they didn’t believe me until they went to talk to a lawyer. And best part is, now they always say I’m not thankful because I will inherit their houses and they build them for me? And their parents were really poor small scale farmers, still they saved up to help them with their first home. As you can tell I’m still bitter about that.
I know some proper boomer parents but they are rare AF.
My parents paid everything for my perfect brother when he went studying. He had a luxurious life as a student.
I failed in school, because I was special (autistic later turned out) but should have acted like nothing was wrong. So I didn’t get a penny when I couldn’t eat for a week because I was completely broke. Instead they told me. To get my shit together, act like an adult for once and take responsibility for my actions.
So far they never acknowledged they ever made a single mistake, they project all their mistakes and failures into me or others, they complain constantly like spoiled entitled teenagers and they do nothing but judge people who are less fortunate.
I’m 38 now, they still tell me I’m behaving like a child even though I always say sorry for the mistakes I make, I always take responsibility and acknowledge when I’m wrong. I fought in wars (in the military), I have fought mental health my entire life, I struggled within the system my whole life, I have loads of friends who I’d die for and who’d die for me, while my parents have no one and are just a bunch of entitled sour lonely fucking boomers. Who’s the responsible adult here? Although I doubted myself many many times, my therapists and friends have ensured me it’s them, not me. And I started to see that too, so I ended my relationship with my parents for good. And with my entitled little brother who always takes my mom’s side no matter what.
At least you got out of that horrible family dynamic! Don’t know if I can judge from one comment, but sounds like your wellbeing didn’t benefit from the relationship and am happy for you that you’re doing better for yourself. And of course there are some nice boomers but even if I have the nicest, most loving parents they just seem they don’t care about the future of their kids and next generation while the generations before tried to make their kids’ lives better.
My mom is the same with the completely outrageous spending on frivolous things but as soon as it comes to visiting me, a 2 hr plane ride, suddenly she guilts me for spending the money. “ I have to stay with you for 15 days because I paid for this $200 ticket and it’s just not worth it if I stay just a couple days like you say I should “ — I’m autistic and NEED my routine and space back after 5 days maximum. She loves to push boundaries to get what she wants : a free stay at my home in a vacation state. I’m constantly telling her no you cannot stay with me for 2 fucking weeks because you feel entitled and live for pushing boundaries.
I’m very fortunate to have found a house while prices were affordable for me. If I had to attempt it now, I’d be up shit creek. Meanwhile she is building a custom 7,000 square foot home, because of course her 4,000 one is just not cutting it anymore … the garage isn’t pretty enough for her $80,000 suv she randomly wanted AND my step dads $100,000 truck he needed afterwards to match her new car … fucking ridiculous.
My parents live 2h drive away and are already guilt tripping me for that drive. While they would come to me 10% of the time, I had to go there 90% of the time. I’m autistic too, my mom drains me within an hour. No joke.
Goddamn, with their parents’ history, I cannot possibly think of this as anything but mental decline. The basis of their political affiliation is a reflection of the state of their brain, to be sure.
Yep that’s how taxes fucking work
The unfair part of this is that the $500k threshold for the tax hasnt been updated since 1997.
In 1997 the average price for a house in California was about 180k now its $800k. If the tax was the same ratio it now wouldnt apply until the house was worth about 2.2mil (napkin math, I’m not getting out the calculator) Now I’m not saying they arent crying about a problem many of us would kill to have but thats a difference of about $340,000 in taxes.
They knew the limit when they bought the house. And it’s gone up more than they could’ve dreamed. That’s plenty fair.
Problem is their house went up by a huge percentage, but so to has every housing arrangement they will need.
Maybe not a whole lot of sympathy for someone having to sort out living arrangements with ‘only’ $2.8 million or so to work with, but this can scale down to pretty ‘normal’ house prices like $500k.
And how much have wages gone up? $500k is still very expensive, sounds like maybe it should be a little more but it sounds more like a consequence of letting housing prices run away for a few decades.
Either you shouldnt be paying any capital gains on a primary residence full stop or it should be on a sliding rate over time. (20% for first year -1% per year after)
Buying a house (even a mcmansion) and living in it for 30 years isnt a hustle or an investment strategy… its just living.
That’s… actually an interesting way to slow down flippers.
Plenty of folks are relying on the sale of their homes to pay for retirement, this couple in question is even an example of that. The big issue there is that it requires home prices to just climb and climb because they have to outpace each other(a sale of a home for this purpose will also need to buy the next home). The value of the home goes up with inflation but it also gets an additional increase because now it’s expected to help pay for 15-30 years of retirement, and the cheaper houses see the price range vacuum and seek to fill it not only because of greed but also because its sale will probably be used to buy the bigger, now even more expensive home. It’s shelter and we treat it like a luxury good.
Every time the price is referenced it’s used as excuse to raise prices elsewhere. It’s a feedback loop of greed fueled by the lack of a safety net and a lack of protections for both homeowners and renters. In Canada and the US things are extra bad because the demand in good cities is high but a lot of the existing housing, and even the new stuff, is production homes in “neighbourhoods” that are isolated, car-centric deserts and it’s still expensive.
Keep in mind, it’s profit. If you bought the house for $500k and selling for $800k, that’s only $300k in profit. Plus you can include the cost on renovations and there are lower percentages when you own and live in the house for over 2 years.
Your home listed at…$4,500,000 is going to cost you $700,000 in taxes? Cry me a river straight to the bank with your remaining $3,800,000. I hope they raise the tax.
Plus they’re in their 70’s. Pretty sure 3.8 mil will last you the rest of your life.
I’m in my 30s and could make 3.8 million last me the rest of my life. Even if I wasn’t good at investing and just put it in an interest checking account earning 1% interest, it would earn 38,000 a year. Which is right around what I make now. There’s two of them, and you do have to account for inflation, but it really wouldn’t be difficult to get 2-3% return on that and still be able to live off the interest alone.
Not if you need it to buy a house.
This is the dumbest fucking article, holy shit. Fucking boomers. Cry more about paying the already generously low LT cap gains tax. Jesus fucking christ.
The one thing that would turn my exhausted ire into joyful schadenfreude is if they equity-leveraged the shit out of it, and didn’t understand that this would hit them in the balls when they eventually sold.
I wish the boomers would just die already. At this rate I’m going to live my whole life under their greedy little thumbs
Yeah. My wife and I paid roughly 38% on the 120k we made last year through grueling hours and hard work.
These old fuckers should pay at least that much in taxes on the house they made millions on just by living in it.
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Sounds like they can afford it if they’re rich enough to own that house.
The tax is only 20%, like you get to keep the other 80%. That sounds pretty good to me.
What makes this even worse is the article doesn’t mention all the money this couple saved by not paying rent for the duration of their home ownership. So not only would they make profit on the sale, they didn’t have to pay rent for all those years, and instead got to keep that money, which puts them at a much bigger financial advantage than folks who can’t afford a home in the first place.
It’d be funny if they died like a week after the sale closes and they move into the new community.
Oh no. They only get to keep 2.8 million? Whatever will they do?
So in other words it is taxed substantially less than income… Even though it is clearly a form of income… Cry me a river…
Can y’all like think for five minutes before you get hate boners when you see the words “million” and “dollars” in a sentence? These are two old people trying to move houses post-Covid in California; worrying about nearly a million dollars being shaved off their retirement is a very reasonable concern. The fact that you don’t have this kind of money to retire is because you’re being fucked over, not because they’re hoarding money.
They’re also missing the point that if people like this aren’t selling their homes that can’t be good for the housing market as a whole.
