Some home sellers would see huge savings under Treasury tax cut plan

Personal Finance


In this example, about $104,000 of the sale price would be due to inflation, according to a Bureau of Labor Statistics calculator. Subtracting that amount from the $391,500 gain would leave $287,500. After the $250,000 exclusion, the remaining $37,500 would generate a tax bill of $7,500 — $20,800 less than under current law.

Part of the existing problem, say experts, is that the exclusion amounts have not changed since they were established in the 1997 Taxpayer Relief Act.

“In 1997, $250,000 and $500,000 seemed like an impossible amount of gain to have on the sale of a house for almost everybody,” said Evan Liddiard, senior policy representative at the National Association of Realtors.

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There’s also the chance that down the road, tax bills for home sales could become more widespread.

“Within another decade or two, there will be a lot of home sales throughout America that have gains above the exclusion,” Liddiard said. “Inflation will push home prices up, and the exclusions are not adjusted for inflation.”

If those exclusions had been adjusted annually since 1997, they’d now be at about $396,000 for singles and $792,000 for married couples.



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