Bill To Double Home Sale Capital Gains Tax Exclusion Gains Support

A legislative proposal aimed at doubling the capital gains tax exclusion for home sellers, known as the More Homes on the Market Act, is experiencing increased momentum in the U.S. Congress. This bill seeks to reduce the financial penalty associated with selling a primary residence, potentially encouraging more homeowners to list their properties. Prior to Congress adjourning for the August recess, the bill attracted four additional co-sponsors. In the House of Representatives, three Democratic lawmakers have lent their support: Ryan Patrick from New York, and Doris Matsui and Lateefah Simon, both representing California. Concurrently, in the Senate, Republican David McCormick of Pennsylvania has also become a co-sponsor. The bill now boasts a total of 151 co-sponsors in the House, which includes one-third of the 435 voting members along with several non-voting members, and 23 co-sponsors in the Senate. The legislative texts in both chambers are nearly identical, with a minor divergence concerning the method of indexing the exclusion to inflation. For the bill to advance, both the House and the Senate must reach an agreement on a unified final version. The National Association of Realtors (NAR) is actively championing this legislation, believing that a revised tax structure could facilitate a greater number of home sales by mitigating substantial tax liabilities for sellers. Kevin Brown, the president of NAR, has been a vocal advocate, lobbying for the law during a congressional panel in June. He and other NAR leaders have emphasized the bill's significance as a priority, particularly as both major political parties are focusing on housing affordability in the lead-up to midterm elections. They also point to the recent bipartisan passage of the 21st Century Road to Housing Act, a housing reform package comprising 50 provisions designed to streamline regulations, as evidence that such bipartisan cooperation is achievable. Brown has articulated that "just like people were locked into their homes at lower interest rates, seniors are often locked in because of the home equity penalty." He further stated that "this legislation expands existing housing stock and gives seniors the opportunity to tap equity that they have counted on for retirement." The current capital gains tax exclusion for profits on home sales has remained unchanged since 1997. Under the existing tax code, individuals can face taxes of up to 20% on profits exceeding $250,000 for single filers and $500,000 for those filing jointly. The absence of an inflation adjustment for this exclusion means that a significant number of homeowners, particularly those who have owned their homes for an extended period and seen substantial appreciation in value, are now subject to considerable capital gains taxes upon selling their primary residences.