Historic row houses in the Columbia Heights neighborhood of Washington.
amedved | iStock | Getty Images
Million dollar homes are not common in the United States, but you are more likely to find these properties along the coasts.
That’s according to a study by LendingTree which ranked the 50 largest metropolitan areas in the country based on the share of owner-occupied properties worth $1 million or more.
The average share of million-dollar owner-occupied homes in the 50 largest cities is 4.71%. But in San Jose, California, 52.89% are worth $1 million or more, and in San Francisco, 40.37%.
Learn more about personal finance:
How to Avoid a Tax Bomb When Selling Your Home
Here’s how to find out how much student loan debt you can afford
Inflation makes 4th of July celebrations more expensive than ever
Los Angeles, San Diego, New York, Seattle, Boston, Washington, Miami, and Denver are other metropolises with the highest share of million-dollar properties.
In comparison, places like Buffalo, New York; Cleveland and Pittsburgh had the smallest share of million-dollar homes, accounting for less than 1% of owner-occupied properties.
Metros with the most million-dollar homes
- San Jose, California: 52.89%
- San Francisco: 40.37%
- LA: 18.55%
- San Diego: 13.52%
- New York: 10.53%
Metros with the fewest million-dollar homes
- Buffalo, NY: 0.56%
- Cleveland: 0.59%
- Pittsburgh: 0.67%
- Columbus, Ohio: 0.73%
- Cincinnati: 0.78%
The findings come amid growing concerns about housing affordability as mortgage rates rise.
According to Realtor.com, the national median home listing price hit a record high of $450,000 in June, up nearly 17% from a year earlier. Many Americans also have less buying power than a year ago, with 30-year fixed-rate mortgages hovering around 6% for so-called conforming loans of $647,200 or less.
Indeed, rising interest rates have cost homebuyers a monthly budget of $3,500 and $165,000 in buying power since the end of 2021, according to a report by Redfin.
How to limit tax bills when selling a high-priced home
Although profits from the sale of homes are considered capital gains, there is an exemption of $250,000 for single filers and $500,000 for married couples filing together, assuming you meet certain conditions. One of the main rules to qualify is that you must own and use the home as your principal residence for two of the five years prior to the sale.
If your profits exceed these exemption thresholds or you are not eligible, there are ways to reduce the tax burden.
Leslie Beck, certified financial planner and owner of Compass Wealth Management in Rutherford, New Jersey, said many homeowners don’t realize that real estate improvements can be added to the base cost of the home, or the price of a home. purchase, to reduce capital gains.
Some examples may include home additions, patios, landscaping, new systems and more, according to the IRS. But ongoing repairs and maintenance, like painting or fixing leaks, don’t count.
“It’s helpful to have receipts to document these improvements,” said Thomas Scanlon, CFP and CPA at Raymond James in Manchester, Connecticut. “If you don’t have them, get a copy of the permit needed to do the work.”