Wednesday, January 21, 2015


I didn't listen to the State of the Union, but it seems Obama plans to change some tax rules that'll hit blue staters (ie Bay Area, NYC, LA) pretty hard. Here it is:
Estates get what's known as a "stepped-up basis" on assets -- meaning that when you inherit a house from Mom and Dad and later sell it, you're taxed on the difference between the value at the time you inherited it (your basis) and the value at the time you sell it. Obama proposes to use the price your parents paid as the basis, though the first $200,000 is exempted, and there's an additional $500,000 exemption for homes.
Being from the Bay Area, all these folks who I grew up with (the vast majority who probably voted for Obama), this will result in taxes in the hundreds of thousands of dollars. Houses that were bought for 100G in the 1970s are now worth 2 million. This is the difference between paying zero and $300,000 in taxes on inheritance.

A costly vote.

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