Bill has a great suggestion here, and the powers that be should strongly consider it.
- The long-time homeowners who are aging-in-place just because of the heavy capital-gains tax will be freed up to move – and it will have little impact on tax revenue. why? Seniors are so adamant about not paying Uncle Sam a penny that they will die in the house if necessary. The heirs don’t pay ANY tax, so it wouldn’t change the current tax revenue if a one-time exclusion was available – it’s not being paid anyway.
- More boomer liquidations would boost the property-tax revenue sooner.
- The gentrying neighborhoods would upgrade faster.
- It’s fair because it’s available to everyone. You just have to wait until you turn 65.
Something needs to be done because Jay Powell’s real estate reset isn’t going too well, and neither is the California take-your-property-tax-basis-with-you program. The older boomers have already decided to pack it in – and nothing is going to get them to move now.
But without some changes in the current policy, there will be a lag in inventory for the next 10-20 years as the younger boomers start retiring. They are the ones who might cash out and leave the state – and without those moves, the Southern California market will be stuck with artificial restraints on the inventory.
Link to Bill’s article