Historic row houses in the Columbia Heights neighborhood of Washington.
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Million dollar homes are not common in the US, but you’re more likely to find these properties on the coasts.
That’s according to a LendingTree study that ranked the country’s 50 largest metropolitan areas by the percentage of owner-occupied homes worth $1 million or more.
The average proportion of million-dollar homes in the top 50 metro areas is 4.71%. But in San Jose, California, 52.89% is worth $1 million or more, and in San Francisco, it’s 40.37%.
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Other metro areas with the highest share of million dollar real estate were Los Angeles, San Diego, New York, Seattle, Boston, Washington, Miami and Denver.
This compares to places like Buffalo, New York; Cleveland and Pittsburgh had the lowest proportion of million-dollar homes, accounting for less than 1% of owner-occupied housing.
Metros with the most million dollar houses
- San Jose, California: 52.89%
- San Francisco: 40.37%
- Los Angeles: 18.55%
- San Diego: 13.52%
- New York: 10.53%
Metros with the fewest million dollar homes
- Buffalo, New York: 0.56%
- Cleveland: 0.59%
- Pittsburgh: 0.67%
- Columbus, Ohio: 0.73%
- Cincinnati: 0.78%
The results come amid growing concerns about housing affordability as mortgage rates rise.
According to Realtor.com, the nationwide median home price hit a record $450,000 in June, up nearly 17% year over year. Many Americans also have less spending power than they did a year ago, with 30-year fixed-rate mortgages down about 6% on conforming loans of $647,200 or less.
In fact, rising interest rates have cost homebuyers with a $3,500 monthly budget $165,000 in purchasing power since the end of 2021, according to a Redfin report.
How to limit tax bills when selling a high-priced home
While gains from the sale of a home are considered capital gains, there is an exemption of $250,000 for singles and $500,000 for married couples applying together, provided they meet certain requirements. One of the main rules to qualify is that you must own the home and use it as your primary residence for two of the five years prior to sale.
If your profits exceed these exemption limits or if you are not eligible, there are ways to reduce the tax burden.
Leslie Beck, a board-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 cost basis or purchase price of the home to reduce capital gains.
Some examples may include home extensions, patios, landscaping, new systems, and more, according to the IRS. However, ongoing repairs and maintenance such as painting or fixing leaks do not 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 it, get a copy of the permit needed to do the job.”