After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.
Both over 70, the Dragos are empty nesters, and like many of their generation, they’re trying to figure out how to downsize from their 3,000-square-foot, five-bedroom home.
“We are here in a huge house with no family nearby, trying to make a wise decision, both financially and for our well-being,” said Dragos, a retired teacher.
But selling and downsizing isn’t easy, appealing or even financially advantageous for many homeowners like the Dragos family.
Many Boomers whose homes have surged in value now face massive capital gains tax bills when they sell. This is a kind of tax on the profit you make when selling an investment or an asset, like a home, that has increased in value.
Plus, smaller homes or apartments in the neighborhoods they’ve come to love are rare. And with current prices and mortgage rates so high, there is often a negligible cost difference between their current home and a smaller one.
So if you are ok leaving this tax law in the 90s let’s leave minimum wage there too. Can’t have it one way, all pay and taxes should be changed as decades move on. You will be in the same predicament 30 years from now.
A half million in tax free capital gains isn’t enough for you? It was already too high in the 90s.
Minimum wage is an absolute measure: a fixed amount not pegged to inflation. Taxes are a percentage, a relative value that adapts to inflation.
I’m all for a relative measure for the minimum wage.
Also, in this scenario the people would be left with $1,620,000 after selling their house, which hardly leaves them without options. I get that they want to stay in that same neighborhood. But the problem they are facing is an enviable one for many less fortunate people.
Federal Minimum wage even today ($7.25) means living $81 above the poverty line of $14,891.
Example of a home seller in the article they are walking away with $1.55m after all taxes paid.
These are not the same.
And why not?
I do agree with this statement. Corporations are taxed way too low, and those at the bottom of the income ladder are subject to the highest taxation relative to their assets needed for basic living.
$1.55m in my pocket after all taxes paid from selling a home would be a wonderful predicament to be in.
Prop 13 made it so their taxes did not change as the decades moved on. Their property was taxed much closer to that $100k value they bought their house than the current ~$2 million it is worth. They should have been paying about $19k each year in property taxes. Instead they were paying less than 1/10th that.