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.
First, a recap: Existing legislation allows for single-tax filers to exclude $250,000 in capital gains, but that doubles to $500,000 for joint filers such as you and your wife. The amount, set in 1997, has not budged in 26 years. Capital-gains tax is levied at both the federal and state level. Long-term federal capital gains for a house you have owned for over a year are taxed at 0%, 15% or 20%, depending on what income-tax bracket you belong to.
The distance you want to live from a hospital will depend on your own health and expectations for longevity, and on your comfort level. The Pew Research Center carried out a study on how far people live from a hospital: People in rural areas live an average of 17 minutes from a hospital, compared with 12 minutes for people in suburbia and just over 10 minutes for those in urban areas.