This may be on-topic since millions of people own homes. The timing of sales can have a Macro impact on the property market.
DH and I moved to Washington State in 2003. I paid $185,000 but Zillow says it’s worth close to $485,000 now. (A capital gain of $300,000 which would be tax-exempt if we sold it today…which I don’t want to do since I love our neighborhood where I have several friends.)
I own the home in my revocable trust since I paid for it. My trust says that DH can live in it after my death but it will go to my family instead of DH’s subsequent wife (assuming he will remarry after my death). Our home is a ranch house which is comfortable for aging in place.
By Ashlea Ebeling, The Wall Street Journal, Jan. 28, 2024
One, the home-sale exclusion, lets homeowners skip taxes on a large chunk of profit when they sell their homes—up to $250,000 of capital gains for single filers and up to $500,000 of capital gains for married couples filing jointly.
The other provision says that when an owner dies and leaves a property to heirs, the capital gains can effectively get reset to zero. This is called a step-up in basis, meaning the heir would only owe capital-gains taxes on the home’s growth in value over the fair-market price at the time of the owner’s death…
In most states, for homes jointly owned by spouses, half of the property’s basis is stepped up to the fair-market value at the date of the first spouse’s death, which can help cut an eventual tax bill. The other half keeps the original basis, adjusted for any improvements, until the survivor dies. …
If the surviving spouse hasn’t remarried and sells within two years of the first spouse’s death, the survivor still might also be able to exclude up to the full $500,000 of the gain from the sale, using the home-sale exclusion.
In community-property states, such as California and Texas, the tax advantage is even greater. The entire property gets a step-up in basis to the fair-market value after the first spouse’s death.
Keeping your home until death is one of the ultimate tax dodges. [end quote]