In Ohio, 12.6% of homeowners have accumulated more home equity than the IRS allows to be excluded from capital gains taxes. Approximately 1.5% have exceeded the $500,000 exemption threshold for married couples. The limits for exemptions have not changed since 1997, while home values have increased over 260%. Ohio treats capital gains as ordinary income, with a top tax rate of 4.8%. Many long-term homeowners are reluctant to sell and face tax consequences, leading to a reduced number of homes on the market.
More than one in ten homeowners in Ohio have home equity exceeding the IRS capital gains tax exclusion limits, with 12.6% having built up excess equity.
Homeownership was once seen as a means to build tax-free wealth, but rising home values are causing increasing numbers of Ohioans to face taxable gains.
Ohio's capital gains are taxed at a top rate of 4.8%, which, although lower than many states, can significantly impact retirees relying on home sale proceeds.
The rise in home equity taxes, referred to as the 'stay-put penalty,' is leading many homeowners to remain in their homes rather than selling immediately.
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