How Biden’s capital gains tax hike may hit home sellers in hot markets

President Biden delivers remarks on the COVID-19 response and the state of vaccinations at the South Court Auditorium of Eisenhower Executive Office Building on April 21, 2021 in Washington.

Alex Wong | Getty Images

As home prices soar, some sellers in red-hot markets may face a costly surprise come tax time.

President Joe Biden will propose in a nationwide address Wednesday a capital gains tax increase for the top 0.3% of households — those making more than $1 million per year.   

But the proposal may also deliver a tax bill to those selling a home with significant gains.

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Wealthy Americans now paying the top capital gains rate could see a hike to 43.4%, from 23.8%. Both rates include a 3.8% levy on net investment income, created by the Affordable Care Act.  

The tax increases may impact more than stocks, bonds and cryptocurrency, however. Homeowners looking to cash in on sizzling home prices could also receive a bill.

“The proposed increase in federal as well as state capital gains tax rates could sting [home sellers] on the margins,” said Sharif Muhammad, founder and CEO of Unlimited Financial Services in Somerset, New Jersey.

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