Capital Gains Reform for Homeowners Gains Ground in Congress
Big changes could be coming for homeowners who’ve seen their home values soar. Here’s what you need to know—and why it matters for anyone thinking about selling.
For the first time in nearly three decades, there’s serious momentum in Washington to reform the capital gains tax exclusion on home sales—a long-overdue update that could unlock more inventory in a tight housing market.
Currently, homeowners can exclude up to $250,000 (or $500,000 for married couples) in gains from the sale of their primary residence. That cap was set all the way back in 1997, and it hasn't budged since—despite home prices more than tripling in that time.
Why This Matters for You
If you've owned your home for at least 5 years, there's a good chance that your equity has grown well beyond those outdated thresholds. But selling could mean a hefty capital gains tax bill, even for middle-class homeowners. That’s led many long-time owners—especially retirees—to stay put, creating what economists call a “lock-in effect.”
In short: People who want to move aren't doing it, because the tax consequences are just too steep.
What’s Happening Now
Two bills are making headlines:
- The More Homes on the Market Act (introduced by Reps. Jimmy Panetta and Mike Kelly) would double the current capital gains exclusion and index it to inflation going forward.
- The No Tax on Home Sales Act (introduced by Rep. Marjorie Taylor Greene) goes even further—proposing to eliminate capital gains taxes on primary residences entirely.
Even President Trump recently weighed in, stating: “We are thinking about no tax on capital gains on houses.”
With bipartisan backing and pressure from advocacy groups like the National Association of REALTORS® (NAR), this is shaping up to be a rare moment of consensus in Congress.
Who’s Affected?
According to NAR, 34% of current homeowners are already at risk of exceeding the $250,000/$500,000 limit—and that number could rise to nearly 70% by 2035 if nothing changes. This includes many retirees who’ve built up equity over decades and are relying on that wealth for their next chapter.
As NAR Chief Economist Lawrence Yun points out, homeownership is one of the primary ways middle-class Americans build generational wealth. In fact, home equity and retirement savings make up over 60% of household net worth, according to the U.S. Census Bureau.
What’s Next?
The growing bipartisan support—and high-profile attention—means change could finally be on the horizon. Whether lawmakers choose to raise the exclusion limit, index it for inflation, or eliminate the tax altogether, reform could bring relief to millions of homeowners and help increase housing supply across the country.
Bottom Line
If you’ve been holding off on selling your home because of capital gains taxes, keep an eye on these developments. The real estate landscape may soon shift in your favor—and we’ll be here to help you navigate it every step of the way.
Want to know how these proposed changes could impact your specific situation? Let’s talk. Reach out today for a personalized home value report and strategic guidance on your next move.
