Taxes on UnRealized Capital Gains Explained

In the video below, I explain the consequences of Taxes on Unrealized Capital Gains. Plus, Who you vote for President in the 2024 election matters a lot. It matters, because one candidate supports it, and the other doesn’t. If the candidate that supports it wins, it could have a devastating outcome for the whole country.

My clients know that I always want you to be aware of all your options both good and bad. This is so you can make the best decisions possible. And please know that I am not trying to convince you one way or another, I simply want you to be informed.

In the video I provide basic information on the proposed tax on unrealized capital gains mentioned in the news recently. Most likely we would not get to vote on it. So who you vote for is very important in the 2024 Presidential election.

Unrealized Capital Gains Explained

Unrealized capital gains occur when the value of the investment increases. For example, in Real Estate it’s called home equity. The asset is your home and the unrealized capital gains is your equity. When another home in the neighborhood with similar characteristics sells, we can predict the value of your home. I go over Understanding Real Estate Comparables in a different video.

The equity in your home is an unrealized Capital Gain. This is because until you sell it, we don’t know EXACTLY how much your house will sell for. Currently, we pay capital gains tax after we sell. This is because when your transaction closes, we know EXACTLY how much money you made on your home.

If the tax on unrealized capital gains becomes reality, you won’t like it. We will pay taxes every year on what someone thinks the home is worth. And, more than likely it will be a Zillow-type estimate. That type of estimate is where it only takes into consideration what has been sold in the area. What if your home has deferred maintenance and worth less than the home down the street that was fully remodeled? You may still be charged a similar amount on those unrealized capital gains, which could be unfair.

Financial Consequences of These Taxes

Basically, an unrealized capital gains tax would cost you money every year on whatever the government values your home at the time, and you have to pay that tax. Not just once, but over and over every year! Does that sound fair to you? This is especially important to know now, before you vote this year. Because when you vote for a president in 2024, one candidate supports taxing unrealized capital gains, and the other doesn’t. Who you vote for is your business. But also know this. Who you vote for president could potentially cost you many thousands of dollars on your biggest asset, your home. Further, this unrealized tax is not just on your home. It will also be on stocks, your retirement 401k or anything else that accrues in value. I just used Real Estate and equity in a home as an example to simplify things.

Friends, I am not trying to convince you one way or another. I’m just trying for all of us to be informed before such an important election. I hope this make sense, and if you have questions, please contact me.

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