When you die, do you want to create chaos and negativity as you pass away? If so, then make sure to do almost zero estate planning! No matter your level of wealth, if you don’t do any planning of your estate, you could easily leave your children or relatives with very few assets, and the assets you do leave may incur massive expenses for those who receive them. Additionally, you may create serious arguments among your heirs. For example, if your children do not get along and end up as co-owners of your house, they must still agree on how, if, and when to sell your property, and this can create bitter, relationship-ending disputes. If intense, posthumous disputes are the legacy you’d like to leave behind, then a severe lack of estate planning is a great way to achieve your goals.
If you’re already exhausted thinking about estate planning, relax; this is work that you should mostly leave to professionals. Find a good estate planner, and have them advise you on the best way to arrange your estate based on your individual situation and goals. One helpful resource is the non-profit National Association of Estate Planners and Councils. Also, if you have a retirement account through your work, you can often get some help from a financial adviser.
Though you should always discuss estate planning with a professional, there are a few larger concepts that are helpful to at least partially understand so you can be prepared to get the most out of discussions with your estate planner. One important consideration is that there is no single best way to transfer your estate. The best way for you to transfer your assets depends on the size of your estate, the types of assets you own, and the state in which you live. For example, if you live in Florida, there is no state estate tax. However, even in Florida, you still would owe federal estate taxes, which range from 18% to 40%. This is a significant tax, but it only applies to estates worth more than $13.61 million (this figure changes frequently). This means that only about 8 in 10,000 estates pay federal estate tax at all. If you live in Iowa, however, estates of more than $25,000 owe estate taxes (with certain exceptions). Thus, the state where you live, as well as estate size, has a massive effect on tax burden.
As we’ve discussed using Florida as an example, if you live in one of the 33 states with no estate tax, then you’ll only owe estate taxes if you have an estate worth more than $13.61 million (remember that this number changes often). If you have an estate of this size, you probably stopped reading this article within the first paragraph, because you likely have already been over these issues with a professional, and if you haven’t, stop everything you’re doing and call one right now. For the rest of us in those 33 states, it’s not so much federal estate taxes to be concerned about, it’s things like capital gains taxes and state taxes.
If a piece of real property is a significant part of your estate, the first thing you should do is determine your heirs’ level of interest in this property. If you are passing your house to an heir who cannot afford property taxes and can’t pay for maintenance, they may have to sell the property shortly after receiving it. Selling property in a short time frame means the price may have to be extremely low. If you’re passing on a vacation home to your three children, consider whether they really want to use this vacation home, or if owning this home together will cause financial disputes and other arguments. It’s nice to imagine that they will all use the old family vacation home together in perfect harmony, but let’s be honest, this may be a disaster.
After you’ve had a good, realistic talk with yourself and your heirs about who will best take care of and appreciate your real estate, it may be a good idea to put this real estate into a trust so that the property will immediately pass to your heirs on your death and avoid probate. Putting property into a trust is not an extremely difficult process, though it does require professional help. The basic idea is rather simple–you will no longer own your property as an individual person, but your property will be owned by a trust called something like “(Your Name) Revocable Trust.” Your heirs will be named as the beneficiaries of this trust, so they will essentially replace you in the trust once you pass away. Neither you nor your beneficiaries will own the property, but will be the beneficiaries of a trust that owns the property.
One essential consideration regarding real property and trusts is capital gains tax. When an heir inherits property, they get a potentially massive shield from capital gains tax. This massive tax shield involves a concept called “stepped up basis.” If you bought a property for $100,000 decades ago and sold it for $800,000, you would owe capital gains taxes on $700,000 worth of gain. Your original basis in the property is $100,000, and you are not taxed on your original investment (aka your “basis”), which is why you’d be taxed on $700,000 of gain and not on the full sale price of $800,000. However, if you spent $100,000 on a property decades ago that is now worth $800,000, did not ever sell the property, and your heir inherited it, your heir’s basis in the property would be “stepped up” to its current market value of $800,000. Thus, your heir would pay zero capital gains taxes if they sold the property for $800,000. A simpler way of saying this is that capital gains tax liability is essentially erased when property is inherited. Unfortunately, someone has to die to activate this amazing tax break, but I guess everything has a price.
Capital gains tax is also a significant consideration when creating a trust. For example, if you put your real estate into a revocable trust, your heirs will likely get a stepped up basis in your property when they inherit it, so they will likely avoid capital gains taxes. However, if you put your property into an irrevocable trust, your heirs will not avoid capital gains tax. This is because an irrevocable trust does not change in any fundamental way once you die, so death of the grantor (you) is not particularly relevant to an irrevocable trust. However, a revocable trust automatically becomes an irrevocable trust upon your death, and this change in the nature of the trust creates a stepped up basis for your beneficiaries, according to the IRS.
Don’t get me started on Intentionally Defective Grantor Trusts (IDGTs), which function partially as irrevocable trusts, and partly as revocable in the eyes of the IRS. I’ll stop talking about these right now, other than to say that they create a hybrid of tax advantages that can help save your estate money. My point in referencing this somewhat boutique type of trust is to point out that there are a surprising number of options available to suit your specific situation, options that can dramatically change the amount of money you have now, and that your heirs have in the future. A good estate planner will be able to listen to your wishes, and then outline the most cost-saving options to suit your goals. Though I’m not an attorney, I am absolutely certain that assuming your assets will simply sort themselves out after you die is the worst of all the options you’re considering.
I do not expect you to be an expert in estate planning after reading this–I’m not that good of a writer! But I hope that, if you’ve made it this far in this article (and in life) that you have a general, ballpark idea of some of the complex issues to bring up with your estate planner. I also hope you have a new appreciation for how important estate planning is for everyone, no matter how big or small your estate.
I’d also like to backtrack on something I said earlier–you can in fact plan your estate with a skilled professional, and still create absolute chaos when you pass away. If you let your planner know that you’d like to create unbelievable expenses and set up bitter disputes among your heirs, some skillful estate planning could absolutely create a wake of chaos upon your death. The choice is yours!
Let’s start with the basics: What is capital gains tax? It is a type of tax on profits earned from the sale of assets like stock or real estate. When these are sold for more than they cost to purchase, the IRS taxes the gain.
In real estate, capital gains are calculated by taking the final total sale price of the house and deducting its original cost. However, the tax on that gain is calculated with additional considerations:
How long you owned the house
Any fees you’ve paid — escrow, recording and appraisal fees, brokers’ commissions
Your income tax bracket
Your marital status
If you’ve owned your house for less than a year, then the capital gains are considered short term. In this case, taxes are paid at the same rate you’d pay for ordinary income (such as wages from your job). If you owned your home for more than a year, the capital gains are considered long term. In 2024, the rates for long-term capital gains are 0%, 15% or 20%; which rate you pay depends on your income level. All are typically lower than ordinary income tax rates.
You’ll also pay state taxes on your capital gains unless you live in a state that has no income tax (though New Hampshire, which has no income tax, does tax investment income).
Exclusions
It’s likely that you’ve owned your home for more than a year, so you will probably be subject to long-term capital gains rates. However, you may be able to avoid some of the tax because real estate gains are subject to different rules than investment capital gains. These rules apply only to your primary residence, though; if the home you sold was a second property — an investment, vacation or rental home — and you never converted it to your primary property, you are not eligible for capital gains tax exclusions.
For most of the following exemptions, you will need to have owned and lived in the house for two of the five years preceding the sale:
You might be able to defer capital gains if, after you sell your property, you apply your profits to the purchase of a new property within 180 days.
You might be able to take advantage of a capital gains tax exclusion that applies to your primary residence once every two years. Exemptions are $250,000 if single and $500,000 for couples filing jointly. (Some widowed individuals may be eligible for the $500,000 exemption.)
Itemized construction expenses can be added to the cost basis of your house, thereby helping decrease your tax liability. Improvements must be considered major — adding a new bedroom, renovating a kitchen or bathroom, installing a roof — and must be documented; estimates won’t work. (For examples of other home improvements, see IRS Publication 523, Selling Your Home.)
Selling costs like real estate agent fees and closing costs can be deducted from the sale proceeds to reduce your capital gain.
You might qualify for a partial exclusion if you sold your home as the result of an unforeseen circumstance — for example, if you moved for work, had a health complication, faced divorce or marital separation, suffered the death of your spouse or incurred a loss from a natural disaster. You may also qualify for a partial exclusion if you came to serve in the uniformed services, foreign service or intelligence services.
You may be like many homeowners who’ve experienced significant capital gains since you purchased your home, but you can manage the tax liability and keep more of the profit in your pocket. Consult a tax professional to determine all the tax implications of selling your home.
The Coldwell Banker Global Luxury® program unveils the third installment of The Trend Report, a comprehensive analysis of what’s new and noteworthy for high-net-worth real estate.
This wildly popular and award-winning annual report series draws upon insights and data from leading sources like the Institute for Luxury Home Marketing, Wealth-X, and other industry experts. Together, these sources provide a unique perspective on the evolving landscape of luxury real estate, highlighting the key trends shaping the market today and predicting future directions of luxury property buying and selling.
What's inside The Trend Report 2025:
Luxury Shows Resilience: Luxury housing continues to outperform the broader market, with single-family home prices growing twice as fast.
Positive Outlook for 2025: Over 85% of Luxury Property Specialists express optimism for buyers, and 74% for sellers, indicating a positive market outlook for 2025.
More Property Selection Powers Pent-Up Demand: Increasing inventory is creating more opportunities for buyers, potentially unleashing pent-up demand.
The Rise of the "She-Elites": Affluent women are a dominant force in luxury real estate, driving demand and influencing purchasing decisions.
Doors Open for Gen X, “The Luxury Latchkey Generation”: Gen X buyers are a key growth segment, fueling demand for multi-generational living spaces.
Indoor-Outdoor Living Remains Paramount: Over 60% of Luxury Property Specialists rank indoor/outdoor living as a top feature among their clients, reflecting a growing demand for seamless indoor-outdoor spaces.
Value-Driven Luxury: Affluent buyers are increasingly focused on value, seeking properties that offer unique experiences and long-term returns.
New Luxury Location Drivers: Wealthy individuals are seeking new locations that offer lower taxes, economic opportunity, safety, lifestyle benefits, and favorable climates.
Developers Adapt to Evolving Demands: Luxury developers are creating bespoke projects that cater to the evolving needs and preferences of today's discerning buyers.
You want to sell your home, but the kids have scuffed up the floors and chipped the paint. The kitchen could use a face-lift and the lawn has seen better days.
The consensus among the dozen real-estate agents interviewed by The Wall Street Journal: Don’t go overboard.
Shelling out small sums to punch up highly-visible parts of the property, particularly outside, increases the curb appeal. Spending large amounts to turn the place into your dream home doesn’t make it someone else’s dream home. (Below is a bang-for-your buck guide.)
“Sellers should avoid trying to become a general contractor,” said Scott Harris, a real-estate agent at Brown Harris Stevens in New York.
What to fix
Replacing a garage door cost $4,513 on average in 2024, but added $8,751 to the resale value, recouping 194% of the cost, according to Zonda, a residential construction-focused research company. That project provided the most value in the firm’s annual cost-value comparison.
Replacing an entry door cost $2,355 on average and added $4,430 to resale value, recouping 188% of the cost.
“They will recoup all of that with very low risk, and it’s a low outlay,” says Todd Tomalak, principal at Zonda, about exterior doors.
Minor exterior work is some of the most likely to pay off. It makes the house look nicer in listing photos and brings potential buyers through the door, real-estate agents say.
A National Association of Realtors survey from 2023 found that sellers would recoup 217% of the cost of lawn care, 104% of the cost of landscape maintenance, and 100% of the cost of overall landscape upgrades.
Small-ticket items inside the house are worthwhile, too. Refinishing hardwood floors on a roughly 2,500 square foot home costs an estimated $3,400, but adds roughly $5,000 to the value of the house, according to a 2022 NAR survey.
What to skip
There is a high bar for doing costly work, like remodeling a kitchen or adding a new bathroom. Your tastes aren’t guaranteed to appeal to potential buyers, meaning they won’t necessarily be willing to pay lots more.
“Unless you have objectively excellent taste or can remove your personal preferences from the process and focus only on timeless, enduring style, I do not advise sellers to invest in a major renovation,” said Kate Wollman-Mahan, a real-estate agent at Coldwell Banker Warburg in New York.
Adding an upscale primary suite to a house costs $339,513 on average, but only adds $81,042 to the resale value, recouping 24% of the cost, according to Zonda. Remodeling an upscale kitchen costs $158,530 on average, but adds $60,176 to the resale value, recovering 38% of the cost.
Instead, think smaller. Refresh an old room with new cabinet pulls or more modern light fixtures. Reglaze a bathtub. Replace old toilet seats and shower rods.
Jennifer Roberts, a real-estate broker at Coldwell Banker Warburg in New York, said she once had trouble selling an apartment with red kitchen cabinets. After she had the seller paint them white, the home went quickly.
It is also tough to make the math work on major exterior projects. A metal roof replacement costs $49,928 on average, but adds $24,034 to the resale value, recovering 48% of the cost, according to Zonda.
Low-cost, big payoff
Painting the walls and pulling up old carpets can freshen the house, even if the finishes are dated. Decluttering the spaces, washing windows and treating lingering smells all help the house to show better.
“I watched a home priced under a million languish on the market with another agent,” said Benjamin Dixon, a real-estate broker at Douglas Elliman in New York. “We came in and decluttered, painted, cleaned and staged, investing a total of under $20,000 and had multiple offers and sold the home for $1,050,000 in just a few weeks.”
In today’s digital age, it’s tempting to rely on automated tools for everything — including figuring out how much your house is worth. But be careful. The automated estimates you’re seeing online often miss key details that affect the true market value of your home.
Before you toss a for sale sign in your yard and expect to bring in the number you saw for your house online, you need to understand why these tools generally aren’t spot-on and why working with an expert real estate agent is the best way to get an accurate picture of what your house is really worth.
The Myth: Online Home Value Estimates Are Accurate
Online home valuation tools give you an approximate value for your house based on the data that’s publicly available for your home. While this can give you a rough starting point, the keyword here is rough. As an article from Ramsey Solutions says:
“Online Home Value Estimators Aren’t 100% Accurate . . . The estimates are only as reliable as the amount of public record data the real estate websites can access. The less data gathered for your particular neighborhood, county and state, the less you can depend on this number.”
The Reality: Online Estimates Miss Key Factors
Here’s the biggest issue with online estimates: they don’t take into account the unique aspects of your home or your local market. And that’s why an agent’s expertise can make such a difference when figuring out what your house is really worth. Here’s an example. A real estate agent will also factor in:
The Home’s Condition: Online tools can’t tell whether your home has been well-maintained or if it needs significant repairs. The condition of your house plays a huge role in its value, and only an in-person walk-through can account for that.
The Latest Neighborhood Trends: Is your neighborhood up-and-coming? Are there new developments or amenities nearby that make your home more desirable? Automated tools often overlook local trends that can significantly affect the value of your home.
Accurate Comparable Sales: While online estimates may use past sales data as a baseline, they don’t always reflect the most recent or most relevant comparable sales, or comps. Real estate agents, on the other hand, have access to up-to-date market data and can give you a much more accurate estimate based on real-time sales in your area.
Agents have a deep understanding of the local market, and they can provide insights that automated tools simply can’t match. As Bankrate explains:
“Online estimation tools determine pricing using algorithms that rely on publicly available information. These algorithms can vary widely from one tool to the next and typically don’t account for a home’s current condition or any upgrades or renovations that are not reflected in public records. So they are not as accurate as in-person methods, like a real estate agent’s comparative market analysis . . .”
Bottom Line
While online home value estimates can be a helpful tool to get a rough idea of what your home is worth, they aren’t foolproof. The true value of your home depends on a range of factors that automated tools just can’t account for.
To get the most accurate estimate, give me a call. That way you have expert guidance and up-to-date market insights to set the best possible price for your home.
Thinking about upgrading your property in the new year? Since the housing market is expected to remain competitive, it’s more important than ever to consider improvements.
Read on for tips to elevate your quality of living and your home’s desirability.
1. Revamp Your Kitchen
A well-designed kitchen remains a surefire way to add value. Kitchen improvements can yield a 70 to 80% return on investment when it’s time to sell. Consider replacing old countertops with quartz or granite, updating appliances and refacing cabinetry. Even smaller upgrades like a modern backsplash can deliver great visual impact.
2. Renovate Bathrooms
Remodeled bathrooms are another biggie on a buyer’s wish list. If you go the total renovation route, think about incorporating the latest trends, such as luxurious finishes and spa-like walk-in showers. More affordable options include replacing faucet fixtures, retiling the shower or upgrading lighting.
3. Update Flooring
Outdated flooring is an eyesore for potential buyers. Replace older carpeting or tile with hardwood, engineered wood or luxury vinyl planks. Look for durable, low-maintenance options in neutral tones that will hold their value for many years to come.
4. Extend Living Space With Outdoor Amenities
Outdoor living continues to be a popular choice for increasing your property’s appeal. Whether you take on a DIY project or hire a contractor, adding a patio or deck will extend your living space. Other sought-after amenities include built-in grills, fire pits, pergolas – and for the ultimate upgrade, an outdoor kitchen.
5. Get Smart With New Technology
It’s never been easier or more affordable to incorporate smart technology into your home. Choose from a variety of upgrades that include tech-advanced thermostats, lighting, video doorbells and security systems. These devices provide comfort, peace of mind and can be easily controlled remotely through apps.
6. Invest in Energy Efficiency
Make your home more energy efficient, which not only boosts your property’s appeal but also reduces your bills over the long haul. Consider updating appliances like refrigerators, washers and HVAC systems that meet Energy Star® standards. Other ideas include improving insulation, adding solar panels or replacing old drafty windows.
7. Modernize Your Lighting
Well-placed lighting enhances your property’s ambiance and functionality. Replace outdated fixtures like fluorescent box-style lights or those that don’t provide adequate lighting. Other updates include recessed lighting, dimmers on switches, pendant lights and wall sconces. As a statement piece, consider adding a high-quality fixture above your island or in your main living space.
Enhancing your home’s worth doesn’t require dramatic changes. Whether you’re selling soon or simply want to enjoy a more modern and efficient dwelling, these practical tips will ensure your property remains marketable. Connect with a local real estate professional to learn more.
A recent study from the National Association of Realtors (NAR) shows most sellers (61%) completed at least minor repairs when selling their house. But sometimes life gets in the way and that’s just not possible. Maybe that’s why, 39% of sellers chose to sell as-is instead (see chart below):
If you’re feeling stressed because you don’t have the time, budget, or resources to tackle any repairs or updates, you may be tempted to sell your house as-is, too. But before you decide to go this route, here’s what you need to know.
What Does Selling As-Is Really Mean?
Selling as-is means you won’t make any repairs before the sale, and you won’t negotiate fixes after a buyer’s inspection. And this sends a signal to potential buyers that what they see is what they get.
If you’re eager to sell but money or time is tight, this can be a relief because it’s that much less you’ll have to worry about. But there are a few trade-offs you’ll have to be willing to make. This visual breaks down some of the pros and cons:
Typically, a home that’s updated sells for more because buyers are often willing to pay a premium for something that’s move-in ready. That’s why you may find not as many buyers will look at your house if you sell it in its current condition. And less interest from buyers could mean fewer offers, taking longer to sell, and ultimately, a lower price. Basically, while it’s easier for you, the final sale price might be less than you’d get if you invested in repairs and upgrades.
That doesn’t mean your house won’t sell – it just means it may not sell for as much as it would in top condition.
Here’s the good news though. In today’s market, as many as 56% of buyers surveyed would be willing to buy a home that needs some work. That’s because affordability is still a challenge, and while there are more homes for sale right now, inventory is lower than the norm. So, you might find there are a few more buyers who may be willing to take on the work themselves.
How an Agent Can Help
So, how do you make sure you’re making the right decision for your move? The key is working with a pro.
A good agent will help you weigh your options by showing you what comparable homes in your area have sold for, what updates your neighbors are making, and guide you in setting a fair price no matter what you decide. That helps you anticipate what your house may sell for either way – and that can be a key factor in your final decision.
Once you’ve picked which route you’re going to go and the asking price is set, your agent will market your house to maximize its appeal. And if you decide to sell as-is, they’ll call attention to the best features, like the location, size, and more, so it’s easy for buyers to see the potential, not just projects.
Bottom Line
Selling a home without making any repairs is possible in today’s market, but it does have some trade-offs. To make sure you’re considering all your options and making the best choice possible, have a conversation with a local agent.
California is a coveted place to live due to its temperate climate and variety of geography, from mountains to deserts and a mix of big cities and suburbs.
The consequence of being a desirable place to live is that housing prices are often higher here than in other parts of the country.
While California’s notoriously high-priced real estate market has faced challenges recently, 2025 is shaping up as a promising year for buyers, especially in high-demand areas, Clarke said.
She pointed to the California Association of Realtors’ (CAR) 2025 California Housing Market Forecast, which suggests that single-family home sales are expected to increase by 10.5% to 304,400 units.
As mortgage rates are anticipated to ease, potential buyers previously priced out could find a more favorable environment, Clarke said.
Improving Interest Rates and Market Access
In 2025, the anticipated decrease in interest rates is expected to enhance the housing market by creating a more favorable borrowing environment, Clarke said. She noted that CAR projects that the average 30-year mortgage rate will decline from 6.6% in 2024 to 5.9% in 2025, which could help increase affordability and allow more buyers to enter the market.
“Lower interest rates are beneficial even for my discerning cash buyers who are generally less affected by financing costs as they tend to energize the overall housing market,” Clarke said.
With more buyers active, property values will strengthen, and appreciation can accelerate, supporting long-term equity growth for all buyers, including those purchasing without financing.
Stable Market Conditions With Modest Price Growth
While home prices will continue to rise, they are expected to do so at a slower pace than in the last few years, Clarke said, so getting in now will be better than waiting a few years. A projected 4.6% increase in median home prices reflects this steady but manageable growth, she shared.
Unlike the rapid price hikes of recent years, this gradual appreciation rate can offer buyers more predictable investment returns, she explained.
“The balance of stable price growth and increased inventory gives buyers an edge, especially in markets that are becoming less overheated,” she said.
Market Resilience in Luxury Segments Is Good for Everyone
While the average buyer is not looking to buy luxury homes, when these markets improve, this can be good for the housing market as a whole, she said.
“Santa Barbara and other coastal and affluent areas like nearby Newport Beach attract a high percentage of cash buyers who are less influenced by interest rate changes. This dynamic helps stabilize the luxury market in these areas, creating a more resilient investment environment,” she said.
Movement in High-Demand California Markets
While Santa Barbara is a strong market for its coastal appeal and high-quality amenities, other California regions also show promising investment potential in 2025, Clarke shared.
Bay Area suburbs: Markets like Walnut Creek, Orinda and Mill Valley are seeing an uptick in interest from buyers seeking more space while remaining close to Silicon Valley and San Francisco, Clarke said.
Sacramento region: As a more affordable alternative to the Bay Area, Sacramento continues to attract families and professionals who value proximity to Northern California’s job centers. Clarke said increased inventory here may allow for greater flexibility and pricing opportunities.
Southern California inland markets: Inland Empire cities such as Riverside and Rancho Cucamonga have become popular among buyers priced out of Los Angeles, offering a suburban lifestyle at a lower price point. This region is forecast to benefit from moderate price appreciation and increasing demand.
A Buyer-Friendly Inventory Landscape
Clarke feels confident that 2025 will see a healthier inventory, as lower rates will likely push more homeowners to list their properties, easing the lock-in effect.
“With CAR predicting an increase of active listings by over 10%, prospective buyers will encounter a more balanced market where they can negotiate more freely and potentially avoid the intense bidding wars of recent years,” Clarke said.
Long-Term Investment Potential and Equity Growth
For buyers looking at the long game, investing in California real estate remains a sound strategy, Clarke said. Even modest appreciation in high-demand areas can translate into significant equity gains over time.
“By purchasing in 2025, buyers have the potential to lock in properties at competitive prices and enjoy appreciation as demand remains strong, driven by limited inventory and continued desirability,” Clarke said.
While affordability challenges persist, particularly in regions with limited supply, inventory increases and stabilized interest rates make this a promising year for buyers ready to make their moves, Clarke said.
