One firm suggests taxes are the reason for a number of zombie homes in the United States:

Roughly 7.2 million single-family homes are sitting empty and being kept off the market, according to the real estate investment service Flock Homes, contributing to a nationwide housing shortage. But a closer look at these “zombie homes” shows that for many owners, selling just isn’t worth it…

According to Flock Homes, for many retirees “the tax bill triggered by a sale far exceeds the cost of simply leaving the home empty.” This includes capital gains taxes (paid on the profit from the sale) and depreciation recapture taxes (which sellers of rental properties face). The federal capital gains exemption, which applies to the sale of primary residences, was not factored into the analysis of vacant homes. Mortgage payments were not included in the analysis, since many older homeowners own their homes outright.

In the country’s biggest markets, the total tax liability for sellers 65 and older often adds up to more than $100,000 on a sale, and it can take years before the annual costs of keeping an empty home approach that amount. In the Los Angeles area, for example, the average exit tax for homeowners 65 and older is $185,000, while the annual cost of insurance, maintenance and property taxes on a zombie home is only about $10,000, the data showed.

Interesting calculations. In the short term, sitting on the zombie home appears to save money compared to selling now and paying a big tax bill. And while sitting on the zombie home, its value might go even higher!

At the same time, if someone sold one of these homes now, they would still likely pocket a lot of money even after paying taxes. The suggestion here is not that the tax costs would wipe out any gains from the sale; rather, the possible sellers just do not want to pay that much in taxes.

The overall pattern fits the shift of American houses from places to live and enjoy to commodities. Why sell if there is going to be a big tax bill? Why not try to gain as much as possible from the sale of a house?