Death and Taxes - Part 2

Continuing on a theme (note: will likely have many more posts on this topic) that impacts everyone, Business Insider recently had a post on The Tax that Incentivizes Boomers to Die in their Homes which states:

“A growing number of older homeowners are subject to the capital gains tax on home sales.

Some baby boomers say they're holding onto their homes so their kids can inherit them tax-free.

This article is part of "The Great Transfer," a series that highlights the mechanics of wealth transfer and the human priorities behind them.

Since 1997, home sellers have faced a federal capital gains tax on home sales with profits over $500,000 for married couples and $250,000 for single filers. The tax can be as high as 20% of the profits over the threshold, and is determined by income. That doesn't include potential state taxes.

About 34% of US homeowners could exceed the $250,000 cap for single filers if they were to sell, and 10% could exceed the $500,000 threshold, the National Association of Realtors found in a 2025 report. That's up from 1.3% of US sellers in 2003 and 3% in 2019, the property data firm CoreLogic found.

If the capital gains tax had been adjusted for inflation when it was implemented, the $250,000 cutoff for individual home sellers in 1997 dollars would be about twice as high — $496,000 — in 2024 dollars.”

I am not going to opine on whether this is good policy or if the watermarks are right. Rather, I am going to accept the law as fact (it is the current state of play) and discuss the implications. This is more practical and applicable than trying to influence / change / etc policy.

Managing a capital gains event, whether it be real estate or investment or otherwise related, is critical. Sure, it’s a high class problem, but a problem nonetheless. And given there are 12 million families who are going to pass $1-$5M of inheritance to the next generation, it is an item that needs to be addressed at scale.

Does having a Trust and putting the home in the trust reduce this risk? Is there an expert who can help families through this process? Is there a system to ensure that 12 million families are well positioned to keep more money in the family rather than having the tax man, lawyers, and probate courts win?

Forward is designed to help families through the inheritance process. Please feel free to sign up for our private beta, as help is on the way. We are here to help move families forward…