Dear Monica: My husband and I are ready to move on from the home where we have lived for 30 years. The house is too large for us and we would like to find a smaller, newer property close to things we like to do. But the idea of paying capital gains taxes has us unable to make the move. What would you advise? Annemarie G.
Dear Annemarie: You are like many who have lived in the Bay Area a long time and have enjoyed substantial appreciation in the value of their home. We who live here are more fortunate than those in other parts of the country where there has been only modest appreciation. The rise in your home value has made you feel rich, but now that you want to sell, you feel less rich when you contemplate paying capital gains tax.
This is a decision you will have to make on your own. You have always known that when you sold, there would be tax to pay. Of course if one of you dies, the surviving spouse will have a step-up in the base value of the home as of the date of the death, and there won’t be any capital gain. But you may not want to wait for such a sad event just to avoid a tax. You should make the decision based on how and where you want your life to be. Paying capital gains tax is an unfortunate by-product of selling but it is worth doing if you can afford it and you want to enjoy your future life in a new place. Think about how you want to live, not about the tax you will pay.