this post was submitted on 30 Jan 2024
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After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

Both over 70, the Dragos are empty nesters, and like many of their generation, they’re trying to figure out how to downsize from their 3,000-square-foot, five-bedroom home.

“We are here in a huge house with no family nearby, trying to make a wise decision, both financially and for our well-being,” said Dragos, a retired teacher.

But selling and downsizing isn’t easy, appealing or even financially advantageous for many homeowners like the Dragos family.

Many Boomers whose homes have surged in value now face massive capital gains tax bills when they sell. This is a kind of tax on the profit you make when selling an investment or an asset, like a home, that has increased in value.

Plus, smaller homes or apartments in the neighborhoods they’ve come to love are rare. And with current prices and mortgage rates so high, there is often a negligible cost difference between their current home and a smaller one.

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[–] [email protected] 1 points 10 months ago (1 children)

High housing prices also mean a high selling price for you too and taxes being percentage based means there's never a scenario where you wind up with less money than you would from selling a smaller, cheaper house because regardless of where you are, bigger houses sell for a lot more than smaller houses. The only scenario where this makes sense is if you sold a large home in a place like rural Oklahoma and moved to a shoebox in San Francisco, but that's not what's being described in the article.

[–] [email protected] 1 points 10 months ago (1 children)

You've missed the point. People are breaking even downsizing. That'll mean they won't. It goes over this in detail in the article.

[–] [email protected] 0 points 9 months ago* (last edited 9 months ago) (1 children)

If I've missed the point then why can't you explain how big houses are selling for nearly the same as small houses to the point where people are breaking even going from 3000sqft 5 bedroom homes to a 1200sqft 2 bedroom? A 15-20% loss from capital gains over 500k isn't going to do that nor is an additional 15% tax from California.

The only possible scenario where that makes sense is if you're comparing a $500k home from a married couple to another couple with a home valued at 30% over $500k. For those people, they're going to receive the same as the couple who had $500k in capital gains. This is a math problem so you can't just waive it away with "my opinion is different and you missed my point."

The example in the article is absurd as a single family home with property isn't going to sell for slightly more than a condo unit in some giant complex. That's why they had to rely on an example with made up numbers. If you look up a home their size in El Cerrito, just outside San Francisco, you're looking at $1.6M while a condo is going for $400k. Surely they could afford a $400k condo with $1.37M in profit.

[–] [email protected] 1 points 9 months ago (1 children)

So now you're doubting the article because you've got nothing else. Cherry picking numbers so you don't have to face the arguments presented.

[–] [email protected] 0 points 9 months ago

You haven't presented any argument other than saying "you're wrong," and yes I absolutely disagree with the article based on real, verifiable facts. Cherry picking numbers? The numbers in the article are fictional. You can go check out Trulia or Zillow and see the selling price for a home that size and the purchase price of a condo in the same area.