The numbers don’t lie. Baby Boomers are increasingly staying in their homes longer than expected, and besides living longer lives, the main culprit is capital gains taxes. It’s time the government passes some real stimulating tax reform – give sellers 55 or older a one time tax holiday from the sale of their home.
Why?
First, a tax holiday will allow sellers to keep all their gains from their home. This seems like a fair reward for someone who was disciplined enough to diligently pay their mortgage over 30 years. Once sellers get past the fear of paying taxes, this will increase the supply of homes and stimulate the economy through the sale of homes. Boomers can downsize, and Gen Xers and Millennials can move into homes fit for growing families. Something like 28 hands touch a real estate transaction – seems like a good way to create jobs to me.
Second, with the increase in new home purchases, states can collect more in property tax revenue, especially in California where Prop 13 has keep a lid on rising property taxes.
Third, when home owners decide not to sell and instead leave their homes for their heirs, no taxes are collected unless the total value of the estate is high enough to trigger estate taxes. The government will likely lose out on the tax revenue anyway, so why not just bite the bullet sooner and do something to help the housing shortage and do something to stimulate the economy. Just think of the new retirement communities that would be built if something like this passed. Empty nesters could downsize from their 3000′ sqft homes and move into something that is one level and has nice amenities to enjoy their retirement years.
I don’t expect this post to change anything unless some politician decides they want to get re-elected and this serves that need, but it’s always fun to dream.
