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Comment by complaintdept | Hacker News Reader

Paywalled, so I can't read the article, but a funny problem of Boomers owning expensive properties today is that a lot of them can't afford to sell because of capital gains on homes they may have bought 40-50 years ago for <$100,000. If they don't have much wealth besides their home (many homeowners) they won't have enough to move into a new place in their area because everyone else's home has shot up in value as well, and taxes just ate up a hefty portion of the sale from their previous home. So they make do with what they have, property values go up, and a lot of people are unable to buy homes because it doesn't make sense to sell.

I'd be interested in seeing, say, a five-year moratorium on capital gains from real estate to see if it helps cool the market.

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They can absolutely sell. The first 250k (500k if married) of *profit* is excluded completely from taxes. And then any profits after that are taxed at 0%, 15%, or 20%. If you're making that much money on a sale you're not getting my sympathy that you might pay < 20% of your PROFITS. Get out of here with the pity for the well-off.

If they don't need the cash bad enough to sell, then don't sell. If they do, they'll have quite a nest egg after.

“Let’s give away more money to people that have already gotten a massive windfall in homes some crumbs fall down to everyone else.”

Somehow I’m not enthusiastic about this proposal.

Canada does this. 100% of primary home profit is tax free, even if it’s in the millions.

They also don’t tax lottery winnings.

I’m not a huge fan of high taxes but it would seem to me not taxing either of groups makes and putting the burden on wage earners makes no sense at all.

Lotto winners I can see. Given that it’s a government scheme and they are already making a hefty profit, tax on top seems like double dipping.

Really? It's literally money won through a game. It would seem taxing it heavily makes more sense than telling someone working 40 hours a week at $15/hr they should be paying taxes instead.

If it was a game run by anyone else, sure. But in this case you pay the tax by buying the ticket.

FWIW I think it's rather immoral for governments to run lottos to begin with.

Sure the government raises some taxes through the lottery, but there is no reason why it can't be more.

I doubt it would cool the market. Some would argue the $250k/500k capital gains exclusion kicked off the huge runup in housing prices in the 2000s. Suddenly it was a very tax advantaged, leveraged investment.

https://www.federalreserve.gov/pubs/feds/2008/200853/

PROP 13 in California probably has similar distortions to the market.

Interesting idea. Pair it with allowing older home downsizers to maintain their previous taxable value so long as the new property is worth less than the one they are selling. The interest adjustment will still be there but at least the taxes aren’t

There's already a 250k per person exemption on capital gains from an owner occupied home. If you're married, that's 500k.

Certainly, in a lot of places, that doesn't cover growth from a house bought in the 80s, but it will at least make a significant dent in the taxable gain. And it's long term taxable gains, so the rate isn't too high, even if you've got to pay state income tax.

As it’s been explained to me (I just bought my first home), the first 500k of capital gains on a primary residence are tax exempt.

FWIW in Canada capital gains on a primary residence are completely tax exempt and their housing market is even more of a mess than in the US.

>cool the market

Do you mean warm it up? It's currently frozen. Lower interest rates are the surest way to fairly warm the market up. Cutting capital gains tax makes the rich richer and the poor poorer. Warming the market won't increase supply though.

Cool it down, as in, lower real estate prices.

Market hotness is measured in days that a house is on the market, not dollars it sells for.

https://fred.stlouisfed.org/tags/series?t=market+hotness#

Lower interest rates are the surest way to fairly warm the market up

That’ll will unfreeze the market but also resume the insane price spiral.

Try building. And not a little bit either. Think Post-WWII.

Gift link to get past the paywall - https://www.nytimes.com/2024/04/20/health/seniors-home-equit...

All I’ll say is, I’ll vote out any government that passes any policy that benefits only the boomers. Consistently influencing policy decisions that only benefited them at each point in their life is why we’re in the mess we’re in. You can’t just change the rules for the game every other generation has been dealing with just because you now have to play it too.

If it cools the market down it benefits just about everyone except the speculators.

It doesn’t cool the market, only allows people who already have made a lot of money at the expense of others, keep their money while others don’t. Do I get a moratorium on my income taxes?

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