A recent study from the Center for Retirement Research at Boston College finds that even when home prices are relatively strong, the amount older sellers receive can differ a lot from those of younger homeowners. While the research doesn’t point to a single cause for this difference, it does raise questions about how home-sale outcomes can affect retirement income and taxes. Here’s how it breaks down.
The study analyzed roughly 10 million repeat home sales using CoreLogic deed records linked to demographic data to estimate sellers’ ages. The researchers then compared outcomes across age groups while controlling for home type, location, and broader market conditions and they found a consistent gap. What they found is that older homeowners tend to realize lower proceeds when they sell compared with younger sellers with similar observable characteristics.
The study found that:
- "Older sellers get less starting at age 70," with the gap "increasing with each additional year."
- There is an estimated 5% gap in realized sale proceeds over the average 11-year holding period for some cohorts.
- For a typical home, the differences can amount to tens of thousands of dollars, depending on market conditions. Per the study, for a median $400,000 home, that is roughly a $20,000 reduction in proceeds.
While there appear to be several explanations for the gap, the study points to two primary factors.
- First, older homeowners are more likely to sell homes with fewer recent updates, which can affect pricing even in strong markets.
- Second, the researchers report that in some cases, older adults are more likely to use off-market or less competitive listing channels than the Multiple Listing Service (MLS), which can result in fewer bidders.
The study also found that some home sales at older ages are driven by life transitions like downsizing, health changes, or moves into assisted living, where speed and certainty matter more than maximizing the price. This can lead to accepting an early offer rather than waiting through a longer sales process.
A lower home sales price can also affect their broader financial picture after the sale especially when it come to how much tax they will have to pay over the remainder of their lives. For instance, a retiree may expect a home sale to generate a certain amount of cash, enough, for example, to fund a year or two of spending without significantly tapping retirement accounts. But if the actual sale comes in lower than expected, that shortfall might have to be covered through additional withdrawals from traditional IRAs, 401(k)s, or taxable investment accounts.
This means that those extra withdrawals are generally taxed as ordinary income. This results in a larger-than-planned draw in a single year that can push a retiree into a higher marginal tax bracket, even if only part of their income crosses the higher bracket’s threshold. And if it pushes the income too high, it can also eventually increase Medicare premiums (IRMMA surcharges), since those costs are tied to income levels from two years prior. So, As a lower-than-expected home sale price can have retirement planning implications beyond the transaction itself that have to be taken into consideration.
Even though the tax impact here is mostly about how income replacement flows through the rest of the retirement portfolio, capital gains are also an important consideration in retirement. The tax treatment of a primary residence remains unchanged, including the capital gains home sale exclusion of up to $250,000 for single filers and $500,000 for married couples. That tax break can shield many homeowners entirely from tax on the sale. A 2026 analysis done by the Tax Policy Center and Brookings Institution found that about 90% of households age 65 and older will likely remain within the current home-sale capital gains exclusion, while roughly 10% would have gains large enough to exceed it.
There is other recent data that indicates approximately 8% of home sales resulted in gains that exceeded the home exclusion threshold, which is more than double the percentage over the last five years or so, according to analytics company CoreLogic. This has prompted several proposals in congress, including bills that would eliminate capital gains taxes on home sales and a recent legislative proposal to increase the capital gains exclusion to $1 million for homeowners age 65 and older.
The basic reason this has become a problem is that the exclusion limit hasn't been adjusted for inflation, so the value of the tax relief provided by the home sale exclusion has eroded over time. This means that homeowners across the U.S., but even more often in states like California, New York, New Jersey, Massachusetts, Florida, and Colorado with higher property values are likely to see gains exceed the exemption limit.
If you're considering a home sale, it may help to speak with a financial planner or tax professional first to understand how the proceeds could affect your retirement finances. This can help you to develop a tailored strategy for your retirement. Some of the things you should consider are:
- How to fit the sale into your complete retirement income strategy
- Whether the money received could affect taxable income or Medicare premium.
- How the proceeds will be used, saved, or reinvested to give you the best returns.
- Keeping it on market longer allowing enough time to attract multiple buyers and maximize the sales price.