Says Joe Biden's 'capital gains tax means that when you sell your home you'll owe taxes of 40% of your profit!'
If Joe Biden wins this year's presidential election, you may have a big tax bill coming your way should you decide to sell your home - at least, that's according to some folks on social media. An Oct. 12 text post on Facebook claims the Democratic presidential candidate would dramatically increase capital gains taxes, affecting anyone who sells their home. 'Biden's capital gains tax means that when you sell your home you'll owe taxes of 40% of your profit!' the post says over a background of poop emoji. 'Let that sink in.' The post was flagged as part of Facebook's efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.) The source of the post is a Trump-supporting real estate agent based in Eugene, Ore. We reached out to her for evidence to back up the post, but we haven't heard back. So we looked into it. (Screenshot from Facebook) The post is wrong - several fact-checkers have debunked it. Biden would increase capital gains taxes for Americans who make more than $1 million per year. Those taxes apply to home sales if sellers make hundreds of thousands of dollars in profit. First, let's review what capital gains taxes are. A capital gain is the difference between what someone paid for an asset, also known as the 'basis,' and what they sold it for. The capital gains tax is the main federal tax that the Internal Revenue Service imposes on real estate. For example, if you purchased a house for $250,000 and sold it for $300,000, your capital gain would be $50,000. However, the IRS typically lets sellers deduct up to $250,000 in capital gains if they're single and $500,000 if they're married and file joint tax returns, so you probably wouldn't owe anything. Biden has not proposed changing those exemptions. He also hasn't advocated raising taxes on Americans making less than $400,000 per year, as we've reported. On his official campaign website, Biden says he would double the long-term capital gains rate from 20% to 39.6%. His administration would use that money to help pay for Biden's health care plan. However, the 39.6% tax rate would only apply to those making more than $1 million per year. That means Biden's proposal would not affect the vast majority of people - 8.5% of Americans make more than $200,000 annually. According to the Internal Revenue Service, the capital gains tax rate 'is no higher than 15% for most individuals.' 'Some or all net capital gain may be taxed at 0% if your taxable income is less than $78,750,' the agency says. 'A capital gain rate of 15% applies if your taxable income is $78,750 or more but less than $434,550 for single; $488,850 for married filing jointly or qualifying widow(er); $461,700 for head of household, or $244,425 for married filing separately.' What does that look like in practice? Let's break it down. Let's pretend you're married and file taxes jointly. You and your partner's combined annual income is $650,000, putting your household in the IRS' top federal income tax bracket. You decide to sell your house, which you purchased for $400,000. To your surprise, you get your full asking price of $700,000. RELATED: No, Joe Biden doesn't want to impose a federal tax on homes Your capital gain would be $300,000 on the home - several times higher than the nationwide average. Since your household's annual income is less than $1 million, Biden's proposed capital gains tax rate would not apply to you. And since you're married and file taxes jointly, you probably wouldn't owe the IRS capital gains taxes anyway. So in what real estate scenario would Biden's proposed capital gains tax rate kick in? First, your household would have to make more than $1 million per year. Then, if you're single, you'd have to sell your house for at least a $250,000 profit. If you're married and jointly file taxes, you'd have to make $500,000 on a home sale. For the vast majority of Americans, that is unlikely - and far from a blanket tax on home sales, as the Facebook post says. We reached out to the Biden campaign for a comment, but we haven't heard back. The Facebook post contains an element of truth but ignores critical facts that would give a different impression. We rate it Mostly False.
The Facebook post contains an element of truth but ignores critical facts that would give a different impression. We rate it Mostly False.
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