False claims about Biden’s tax plan spread online
CLAIM: Democratic presidential candidate Joe Biden’s tax plan will raise capital gains taxes, which means if you sell your home you will be taxed 40% on the profit.
AP’S ASSESSMENT: False. Under existing tax law, if you sell your primary residence, you will not be taxed on the first $250,000 in profit you make from the sale, and if you are married, the exemption is up to $500,000. Biden has not proposed changing that. His proposal would increase taxes on capital gains to 39.6% only for those making an income of over $1 million.
THE FACTS: Social media users have been sharing misinformation about Biden’s tax policy.
The latest is a widely shared post that falsely claims, “Biden’s capital gains tax means that when you sell your home you’ll owe taxes of 40% of your profit! Let that sink in!”
Tax experts familiar with Biden’s tax proposal say the post is inaccurate for two reasons.
For one, Biden’s proposal to raise the maximum capital gains tax rate to 39.6% would only apply to people with incomes of over $1 million a year. “There is no increase in the capital gains rate for taxpayers with incomes below $1 million,” said Eric Toder, an institute fellow and co-director of the Urban-Brookings Tax Policy Center.
The claim is also false because Biden has not proposed making changes to existing tax law, which makes the first $250,000 in profit you earn from selling your primary residence exempt from capital gains tax. The exemption goes up to $500,000 in profit for married couples.
“For most people when they sell their homes — unless they are turning a profit of more than $500,000 for a married couple, which is a lot — you don’t pay any tax on your gains,” said Kathleen DeLaney Thomas, an associate professor at the University of North Carolina School of Law.
DeLaney Thomas said due to that rule, a change in the capital gains tax rate “is completely irrelevant” to profits from a home sale.
Under Biden’s proposal, even someone who earned more than $1 million a year would not be taxed 39.6% on the profit of their home. That person would only be taxed on any profit from the sale beyond $250,000 if they are single, or $500,000 if they are married.
This is part of The Associated Press’ ongoing effort to fact-check misinformation that is shared widely online, including work with Facebook to identify and reduce the circulation of false stories on the platform.
Here’s more information on Facebook’s fact-checking program: https://www.facebook.com/help/1952307158131536