Housing Gridlock Solutions

Dear Editor:

The housing gridlock in our nation could be eased somewhat by doing two things. First, have a one-time exclusion on capital gains taxes for people 60 years of age and older who have lived in their homes for more than ten (10) years. Many seniors are aging in place because they want to avoid a huge capital gains tax bill on the sale of their homes. This is especially true of widows and widowers who may have only a $250,000 exclusion because their spouses are dead for more than two years. Many seniors are not aware that they have two (2) years from the death of a spouse to claim the married couple exclusion of $500,000 on capital gains. In addition, even if they had their homes appraised at the time of the death of their spouse, (stepped up cost basis), they may still get hit with a huge tax bill. After all, some of them may have bought homes in the 1960s and 1970s and paid very little. And if they now own in a gentrified area, they really get hit.

Second, make mortgages assumable. Many young families are locked into low interest rate mortgages and will not give them up for a larger home at a higher interest rate. Why not make mortgages assumable either for the buyer or seller? That is, let the new buyer assume the mortgage or have the mortgage follow the homeowner to a new home.

With these two incentives, housing gridlock would be eased. Young, growing families would buy the large homes vacated by seniors and first time homebuyers/seniors would buy the smaller homes the young families have outgrown. It’s not only the cycle of life, it’s the cycle of housing!

Maureen Walsh