A significant percentage of Nevada homeowners have accumulated more equity than the federal capital gains tax exemption allows, leading to potential tax bills upon selling. Only 250,000 USD in capital gains is exempt for individual filers, and 500,000 USD for married couples. Since 1997, home prices have increased 260%, making these exclusions inadequate. The absence of a state capital gains tax in Nevada helps reduce overall taxes, but federal liabilities can still be substantial, causing homeowners to hesitate in selling. Consequently, this leads to reduced housing market turnover and limited options for buyers.
Homeowners in Nevada may be surprised to find that 43% have home equity exceeding the federal capital gains tax exemption, leading to significant tax exposure.
Current tax exclusions for capital gains haven’t been updated since 1997, leaving homeowner gains vulnerable due to a massive increase in home prices.
Nevada's lack of state capital gains tax mitigates local tax penalties, but homeowners still face federal tax bills reaching five or six figures when selling their homes.
The home equity tax creates a 'stay-put penalty,' causing homeowners to reconsider selling, which decreases housing market turnover and impacts availability for buyers.
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