Dear Quentin, My wife and I were fortunate to retire and buy a house for about $700,000 in a growing lake community in 2012. The work-from-home boom of the past few years has increased local housing prices significantly — you can imagine how the ability to do business while sitting on your dock increases housing demand. Our house is now worth over $1.2 million, which has left us with a good problem in that my wife and I have reached the $500,000 married-couple limit for the exclusion of capital gains.
I’ve been trying to convince my wife to take the $500,000 exclusion and move so we can restart the capital-gains exclusion on a new house, but so far she is determined to stay in the current house. Our lake community is far from medical offices, and I fear that if we stay in the home and our health eventually declines, we would be forced to sell and move elsewhere, which could hit us with a big tax bill should home prices continue to go up. Is there any advice you can give that might help us avoid or limit a future tax bill due to capital gains on the lak …
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