Boomers wanting to downsize face huge tax bills - eviltoast

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.

  • Neato@ttrpg.network
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    10 months ago

    The issue is with the tax and high costs of homes, they break even or worse when downsizing. They aren’t realizing that profit from selling because they are trying to buy another, smaller house.

    • givesomefucks@lemmy.world
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      10 months ago

      If their new house is less than a million, they’re fine…

      Very few people “downsize” to a million dollar property.

      Hell, they get $500k before any tax