Interested buyer asked us our “make-me-move number”

Our house has been on the market for one week. So far we have had lots of interest: one official offer (really good), a few other offers apparently coming in, and lots of viewings still being set up. We are reviewing offers Friday morning and making a decision. Today we received a message from our realtor, ‘potential buyer who is very eager wants to know your “make-me-move number.” Do you have one in mind I can share?’ We bought this house a little over a year ago and due to capital gains laws in California, any money we make off the home will be taxed as income and may bump us into a new tax bracket which we want to avoid. We told her we want what they believe is their best offer and that other things that we are interested in that would make an offer stand out amongst the rest are assuming seller closing fees like agent fees or escrow costs. Our home is listed on the high end of comps in the area, in fact probably the highest. We put it on the market for what we purchased it for in 2023. (Edit to add: our house stands out - not many in our neighborhood that are fully fenced in, have as much usable and private land, one level, corner lot, mid-century modern which is super rare here). How would you go about answering this question?

Seek a tax professional. I don’t think you grasp how marginal tax rates work. Being bumped up to a high tax bracket only impacts the income in that bracket. But you could structure a deal so that the buyer pays the same but less is realized as income.

+1. There are very few cases where more money actually has a negative effect. Mostly on the very low end pockets where you disqualify for programs etc faster than the additional money you make.

You do realize only the income in that tax bracket is actually taxed at that rate right? Like if you make 400k, only the income from 325k to 400k is taxed at that 33% rate, not the entire 400k.

So many people don’t understand that.

I once had a boss tell me he didn’t want to give me a big raise because ‘it would actually mean less take-home pay because of the tax brackets,’ and I laughed and said ‘that’s not how tax brackets work.’

They are considering taking a lower price in order to avoid paying taxes on the additional gains… so I’m guessing no, they do not understand income tax brackets very well.

Understanding this should be a 3rd grade graduation requirement.

Lot of 2nd graders on Reddit tho.

It’s remarkable how lacking the US educational system is in basic finance, credit, interest, and tax laws. I feel like the country would be so much better off if this was required learning in high school.

And dear god BUDGETING.

The MAJORITY of people do not understand how it works.

Where would they learn it? Most people who don’t know this won’t know to seek it out.

I know I learned in civics class in 7th grade.

I hope OP comes back to this thread because I’m truly fascinated how long so many people seem to get through life not understanding this.

The IRS even has a nice visual explaining it: Federal income tax rates and brackets | Internal Revenue Service.

Appreciate the link! I understand how it works now - something I’ve honestly never taken the time to do and always just paid what I was told I owed. I heavily rely on my partner to understand the details of our finances which is not very responsible of me.

So glad this is the top comment haha!

And if they lived in the house for 2 years, they would be completely exempt from capital gains taxes.

Not if the gain is over $500k. You’d be taxed on the amount over the 500k.