Homeowners in Virginia are experiencing substantial financial gains as home values rise, but 35% now exceed federal capital gains tax exemptions, leading to increased tax liabilities upon selling. Established in 1997, current exemptions for profits from primary home sales are $250,000 for individuals and $500,000 for couples, but many homeowners are now impacted by unadjusted caps. The average gain exceeding the $250,000 exemption is $146,326, often resulting in substantial tax bills. Virginia ranks high in capital gains exposure, amplifying the tax burden, particularly for long-term owners who feel locked into their homes.
According to the National Association of REALTORS®, 35% of homeowners in Virginia now exceed the federal capital gains tax exemption, potentially triggering thousands in federal and state taxes when they sell.
Today's capital gains exclusion allows homeowners to avoid tax on up to $250,000 in profit from the sale of a primary home-or $500,000 for married couples filing jointly.
In Virginia, the average gain above the $250,000 cap is $146,326. For the 9.4% of homeowners who exceed the $500,000 exemption, the average gain is even higher at $166,102.
This tax burden hits longtime owners hardest. Many who bought decades ago are now sitting on appreciation they never expected to be taxed.
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