Some of the most popular but completely untrue stories and visuals of the week include this one, which is bogus. The Associated Press checked them out. Here are the facts:
CLAIM: Democratic presidential candidate Joe Biden’s plan for capital gains tax means if you sell your home you will be taxed 40% of the profit.
THE FACTS: Social media users have been sharing misinformation about Biden’s tax policy.
The latest false claim states: “Biden’s capital gains tax means that when you sell your home you’ll owe taxes of 40% of your profit! Let that sink in!”
Tax experts familiar with Biden’s tax proposal say the post is inaccurate for two reasons.
For one, Biden’s proposal to raise the maximum capital gains tax rate to 39.6% would only apply to people with incomes of over $1 million a year.
“There is no increase in the capital gains rate for taxpayers with incomes below $1 million,” said Eric Toder, an institute fellow and co-director of the Urban-Brookings Tax Policy Center.
The claim is also false because Biden has not proposed making changes to existing tax law, which makes the first $250,000 in profit you earn from selling your primary residence exempt from capital gains tax. The exemption goes up to $500,000 in profit for married couples.
“For most people when they sell their homes — unless they are turning a profit of more than $500,000 for a married couple, which is a lot — you don’t pay any tax on your gains,” said Kathleen DeLaney Thomas, an associate professor at the University of North Carolina School of Law. Thomas said due to that rule, a change in the capital gains tax rate “is completely irrelevant” to profits from a home sale.
Under Biden’s proposal, even someone who earned more than $1 million a year would not be taxed 39.6% on the profit of their home. That person would only be taxed on any profit from the sale beyond $250,000 if they are single, or $500,000 if they are married.
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October 18, 2020 at 05:23AM
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Does Biden’s tax plan really call for 40% tax on house sale profits? Not true - OregonLive
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