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These 5 metros have the most million-dollar homes: If you’re selling, here’s what to know about the tax consequences

July 5, 2022
Henry Club

Historic row house in Washington’s Columbia Heights neighborhood.

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Million-dollar homes are not common in the US, but you are more likely to find these properties on the coasts.

it is according to one LendingTree Study Which ranked the 50 largest metropolitan areas in the country based on the share of owner-occupied properties worth $1 million or more.

The average share of million-dollar owner-occupied homes in the 50 largest metropolises is 4.71%. But in San Jose, California, 52.89% are worth $1 million or more, and in San Francisco, 40.37% are.

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Other metropolises with the highest share of million-dollar wealth include Los Angeles, San Diego, New York, Seattle, Boston, Washington, Miami and Denver.

By comparison, places like Buffalo, New York; Cleveland and Pittsburgh had the smallest share of million-dollar homes, representing less than 1% of owner-occupied properties.

Metropolis with the Most Million-Dollar Homes

  1. San Jose, California: 52.89%
  2. San Francisco: 40.37%
  3. Los Angeles: 18.55%
  4. San Diego: 13.52%
  5. New York: 10.53%

Metropolis with the Lowest Million Dollar Homes

  1. Buffalo, New York: 0.56%
  2. Cleveland: 0.59%
  3. Pittsburgh: 0.67%
  4. Columbus, Ohio: 0.73%
  5. Cincinnati: 0.78%

come to the conclusion Growing concern about housing affordability As mortgage rates rise.

The average home listing price nationwide reached a record $450,000 in June, up nearly 17% from the previous year, According to Realtor.com, Many Americans have less buying power than they did a year ago, with 30-year fixed-rate mortgages. hovering around 6% For so-called conforming loans of $647,200 or less.

Indeed, rising interest rates since the end of 2021 have given home buyers the power to spend on a $3,500 monthly budget of $165,000. redfin report found it.

How to Limit Tax Bills When Selling a High Price Home

While home sale gains are considered capital gains, there is an exemption of $250,000 for single filers and $500,000 for married couples filing together, assuming you meet certain requirements, One of the main rules to qualify is that you must own and use the home as a primary residence for two of the five years prior to the sale.

If your mileage exceeds these exemption limits or you don’t qualify, there are ways to reduce the tax burden.

Leslie Beck, a certified financial planner and owner of Compass Wealth Management in Rutherford, New Jersey, said many homeowners don’t realize that property improvements are added to the home’s cost basis or purchase price to reduce capital gains. can go.

Some examples may include home additions, patios, landscaping, new systems and more. According to the IRS, But ongoing repairs and maintenance, such as painting or fixing leaks, don’t count.

“Receipts are helpful for documenting these improvements,” said Thomas Scanlon, a CFP and CPA at Raymond James in Manchester, Connecticut. “If you don’t have those, get a copy of the permits you need to do the work.”