Many Minnesota homeowners are encountering significant unexpected tax bills upon selling their homes. Nearly 22.5% exceed the $250,000 capital gains exclusion for individuals, with 3.7% surpassing the $500,000 limit for couples, leading to over 438,000 households subject to taxation. The capital gains exclusion limit, established in 1997, has not kept pace with housing appreciation, which has surpassed 260% nationwide. Homeowners may face large tax liabilities, with average taxable amounts of over $100,000, impacting financial goals across all home price ranges.
Nearly a quarter of homeowners in Minnesota now exceed outdated federal capital gains limits, facing unexpected taxation on home equity due to rising home values.
Over the past 27 years, home prices have soared while federal capital gains limits, established in 1997, have remained unchanged, now affecting many homeowners.
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