Capital Gains Tax Discourages Homeowners From Selling, Senate Hears

The National Association of Realtors® (NAR) president, Kevin Brown, testified before the Senate Committee on Banking, Housing and Urban Affairs on Tuesday, arguing that current federal capital gains tax laws discourage millions of homeowners from selling their properties. Brown urged Congress to double the exclusion limits for capital gains taxes on home sales, which currently stand at $250,000 for single filers and $500,000 for joint filers. This proposed change would exempt up to $1 million in profits for married sellers from capital gains taxes. NAR estimates that approximately 13 million homeowners would face a tax penalty if they sold their homes under the current regulations. Brown stated that the current exclusion limits, unchanged since 1997, do not account for inflation, leading to a larger tax burden for many homeowners today, particularly those who have owned their homes for extended periods. He explained that higher exclusion limits would increase housing inventory by encouraging more seniors to sell and tap into their home equity for retirement, and would also facilitate move-up buyers, thereby freeing up homes for first-time buyers. The capital gains tax rate on profits exceeding the exclusion limit is up to 20%.