That’s not what I’m saying at all.So basically you are saying that people tend to cap their spending when they get into a high tax bracket. They don’t live in HCOL areas, buy expensive houses and things, or go on expensive trips or experiences. They don’t spend up, when their income goes up so taxable is never touched.If this is the case, it means you have significant non-taxable account income coming in. Which presumably means you have less need to tap the taxable account at all. Which presumably means you are more likely to pass on your taxable account to your heirs at full step up basis.When your tax bracket goes up significantly in the future.Name one.
That's fine but there are scenarios where TLH loses. YRMV.
I’m with Toddthebod, I think there is asymmetric upside to TLH that is not fully appreciated by folks.
As a matter of fact expensive houses are the most likely use for TLH losses. It takes a median homeowner with a $500k house 30 years of appreciation at inflation rates for the value to double and thereby start to exceed the capital gains exemption.
How many years would it take a $2M house to appreciate at the same rate before the $500k exemption is hit?
Statistics: Posted by CletusCaddy — Tue May 14, 2024 6:58 pm