Rising home values ​​spur questions about tax rules

Ilyce Glink and Samuel J. Tamkin

Over the past few weeks, we’ve fielded a number of questions about how to prove the cost of improvements and calculate the capital gain of real estate.

Home prices have skyrocketed over the past 10 years. Given how fast home prices have climbed, it’s clear sellers are concerned about saving on the capital gains tax bill they may eventually owe.

According to the Federal Reserve Bank of St. Louis, the median home sales price in the first quarter of 2009 was $ 208,400. In the fourth quarter of 2021, the median home sales price was $ 423,600, more than doubling in 13 years. But that doesn’t tell the whole story.

Over the past few years, home prices in certain locations have risen far faster. According to Redfin, the median home price in Los Angeles has risen 14% compared to last year. Zillow reports that the typical home in Boise, Idaho, rose 20.6% in value over the same period. And according to the S&P CoreLogic Case-Shiller Index, home prices in 2021 rose 32.6% in Phoenix, 30.8% in Tampa and 28.1% in Miami. In a single year.

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