There’s a two year window for widowers as well. But even $250K of tax free profit is … plenty.
Replies
The problem is that the tax locks people into homes they no longer want to avoid the tax (if you die, heirs get it with stepped up basis and no cap gains). Housing costs/prices would be better without this artificial supply constraint.
jul 28, 2025, 4:46 pm • 2 0 • view
I’ll trade you the capital gains tax on 250/500 as soon as the people that would primarily benefit from that allow for more relaxed zoning laws.
jul 28, 2025, 4:53 pm • 1 0 • view
No, it doesn’t. For most people it’s a 15% tax on the profit above the exemption. For low income people it’s 0%.
jul 29, 2025, 3:35 pm • 0 0 • view
Solution for that distortion is … removing the stepped up basis.
jul 28, 2025, 4:53 pm • 0 0 • view
Now that is an excellent, and arguably better, point. The stepped up basis upon death for heirs (particularly when combined WITH the estate tax exemptions) is repulsive.
jul 28, 2025, 6:40 pm • 0 0 • view
Widows can also get a step up to the fair market value to the date of their partners death.
jul 29, 2025, 3:36 pm • 0 0 • view