Flog away!

Er... it's not just millionaires.

My fiancee and I have 2 homes between us -- he has a small house that he bought long enough ago that he may realize some capital gains on it, I have a condo which I'm underwater on. We don't want to live in his because it's too small for the two of us, I can't sell mine due to the current market, so he rented his out and moved in with me. He will have to pay capital gains on at least some of the sale price when the market does improve and he can sell it.

From what I hear, there are a lot of people renting their homes out while waiting for the market to improve. Some have downsized to a smaller apartment because of unemployment. When those people do finally sell, they will have to pay capital gains tax as well.

@5 Yes, I understand that, but as the Federal tax law stands now if you rent your primary residence out or otherwise don't occupy it, you pay Federal capital gains tax on the percentage of years since 2009 that you were not occupying it. Even if you move back in for a while before you sell it.

So if you enter into a relationship with someone else who has a primary residence and you want to move in together, if one of you wanted to rent their place out or leave it empty or if you couldn't sell it right now with the housing market in the state it's in, you would pay some Federal capital gains tax.

Or if you rent your residence out while you move somewhere cheaper to save money while you're unemployed, you would pay some Federal capital gains tax.

If we had a state tax that followed the same rules as the Federal one, you'd get hit twice.