I don’t see a problem with this personally;
You buy a house for $50K like 50 years ago, now it is worth $1,050,000 (million dollar appreciation).
If you sell it now, before you die, you owe taxes on it (minus the onetime lifetime exclusion if you haven’t already used it).
So pay the tax man on your appreciated assets, just like if you sold a long-term held stock.
What difference does it make if you still have debt on it?
Say you bought it for $50K, now is worth $1050,000, and at one point it was worth $1.5M instead, so you borrowed a million dollars against it and spent the money on crack. Should you be able to sell it and not owe any taxes? The fact that you (or the person you inherited from) chose to get a tax-free loan against the equity - and spent it - really should affect your tax bill.
I am all for reducing taxes in a fair way - but keeping loopholes in so that those fortunate enough to inherit wealth can get everything tax-free on things that were never taxed in the first place (i.e. the stepped up basis rule), only help a few rich/lucky people.
Cut taxes on income, cut property taxes, cut sales taxes before you start giving windfalls to heirs that never earned it in the first place.
Don’t be fooled by the ‘oh the family farmers...’, this is a loophole that allows the uber-wealthy to build dynastic wealth for generations at the expense of income earners who need to make up the difference.
“...loophole that allows the uber-wealthy to build dynastic wealth for generations at the expense of income earners who need to make up the difference.”
Of course the current rules benefit the wealthy, and you can make the argument that their kids didn’t earn the windfalls. But you can make that argument for any level of inheritance, even for people of meager backgrounds.
Stepped-up basis also benefits Joe Middle Class, when he inherits his parent’s humble-sized paid-off house that they lived in for 50 years. He didn’t earn it either, but he’ll get his childhood home with no tax owed (other than keeping up with the property taxes, which is a whole other issue). But with the stepped-up basis gone, there’s a very real chance that he’ll have to unload the house to pay the hefty tax bill. And he may not have a house of his own for whatever reason. Biden’s plan would reduce the ability of regular families to pass on intergenerational wealth/property. Over time, most people will be renters to the govt/Blackrock their whole life with little tangible assets.
And I firmly believe they’ll find some way to get their claws in the IRAs too, using a whole host of excuses (covid, black reparations, etc.) Best advice is to not have all your eggs in one basket.
Except it's not worth $1.05 million. It's valued at $1.05 million of overly inflated fiat dollars, brought to you by the same government that calls it an increase and wants to tax you on it.
Have you owned your own property at anytime & sold it for whatever reason???
The calculations on the sale of your personal residence are two-fold.
There is the calculation for “Capital Gains”
Then: there is the calculation for “Walking away money”.
TWO entirely different calculations.
Review your data & your post.
Having too many idle rich is a big problem in this country. They are the ones who end up becoming radical socialists, because they didn’t earn their wealth.
It is not some socialists money!