> Rich people whining about taxes

https://www.sfgate.com/california/artic … 183896.php

When Orene Kearn and her husband bought their six-bedroom Hillsborough home in 1994, they stretched their budget to make it work. That early bet on the Bay Area housing market paid off so well, they now say they’re stuck in their home.

Kearn, 69, declined to share what she paid for the house, but said current estimates put the value at more than quadruple that original price. Her son has long moved out, and Kearn said they might have downsized already, but given the huge appreciation in their home’s value, the taxes on the profits they’d make if they sold would be astronomical — and it’s the main reason they’re not moving.

“The whole system, in my opinion, is designed to not have anyone move out of their homes once they’re empty nesters,” Kearn said.

Lots of homeowners across California feel “locked in” to their housing situation right now. Mortgage rates remain relatively high, Proposition 13 keeps homeowner property taxes low, and real estate inventory remains sparse in most locations throughout the state. But for a large subset of mostly baby boomers, what’s keeping them in place is the money they’d lose to the government — both federal and state — if they sold.

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Federal capital gains rates can reach up to 23.8% for the highest-income sellers. For a primary residence, homeowners can exclude up to $250,000 if single or $500,000 if married filing jointly, and they also can generally deduct any renovations. California, meanwhile, does not have specific capital gains taxes and instead tacks the profits onto regular income, with rates ranging from 1% up to 12.3%.

For example, if a California home was purchased in 1997 for $500,000 and sells for $4 million today, that homeowner would likely owe around $1 million in taxes.

“It really hamstrings people,” Cate said. “I know talking to other people, we’re not the only ones that are in that situation.”