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.
Someone needs to go take a few tax and accounting classes.
https://www.irs.gov/taxtopics/tc701
Are you making a mental note to remind yourself to sign up for classes later?
No. What he was failing to understand was that a number of people wind up in a situation where going from the bigger home to the smaller home (after it’s all said said and done) they just barely break even. If they are only going to break even then why down size? Where’s the benefit? Who would say “hey I have an idea, let’s sell this big house, buy that smaller house, and not have extra cash after it’s done “. No one is taking that deal.
Can you explain why a big home would sell for the same/near the same price as a small home in any given location? If that were a reality, then why doesn’t everyone live in a 5 bedroom, 3000sqft home like these people?