In New Mexico, homeowners may face significant taxes on home sales due to capital gains that exceed federal exclusions. 20.9% of homeowners have built up equity beyond this limit, while 3.5% exceed $500,000 for married couples. The federal exclusion, last updated in 1997, fails to reflect the 260% rise in home values. New Mexico further taxes capital gains as income, even with a 40% deduction. This creates what economists call a 'stay-put penalty,' where homeowners delay selling to avoid tax burdens, reducing market options for buyers.
20.9% of homeowners in New Mexico have built up more home equity than the federal capital gains exclusion allows, meaning they face potential taxable gains.
Capital gains tax policy hasn't changed since 1997, and the federal exclusion limits established then are no longer sufficient given today's soaring home prices.
New Mexico taxes capital gains as income, with a 40% deduction for most filers, resulting in significant tax liabilities for homeowners selling their properties.
Rising property values have turned home equity into taxable gains, leading to a 'stay-put penalty' as homeowners hesitate to sell and trigger taxes.
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