Here’s a big headline that caught my attention, especially as someone who talks to longtime homeowners every day:
Congresswoman Marjorie Taylor Greene has introduced a bill called the No Tax on Home Sales Act. If passed, it would increase the federal capital gains tax exclusion on the sale of your primary residence. That means you will be paying fewer taxes, should this bill pass!
Right now, if you sell your home for a big gain, the IRS lets you keep the first $250,000 of profit tax-free if you're single or $500,000 if you're married. But anything above that gets taxed, sometimes as high as 20%. And with home values rising dramatically over the past few decades, more and more homeowners are hitting that limit, especially here in California.
Greene's bill would increase the limits to $500,000 if you're single and $1,000,000 if you're married. But will that really move the needle?
According to recent data, nearly 1 in 3 U.S. homeowners now has more equity than those exemption limits protect. And for older homeowners who’ve owned their homes the longest, the numbers are even more eye-opening. Many face tax bills in the $40,000-plus range when they try to sell. That’s a major disincentive to move, downsize, or free up inventory.
Greene says the goal of her bill is simple: let homeowners keep the equity they’ve spent decades building. This wouldn’t apply to investors or flippers, just people selling their primary homes. She believes it would not only put money back in homeowners’ pockets but also boost housing supply by removing one of the biggest reasons people stay put.
And she’s not alone. The National Association of Realtors has long called for changes to the capital gains tax structure, arguing it was never meant to punish homeowners. It was designed for wealthy investors, not retirees cashing out of a long-held family home.
Now, whether this bill has a chance of becoming law is anyone’s guess. But the fact that it's being introduced at all is telling. There's growing awareness in Washington that our housing policies need to catch up with today’s market realities.
The capital gains exclusion hasn’t been updated since 1997, back when the median U.S. home price was just $145,000. Today it’s more than double that. In many parts of California, it’s triple or quadruple. If the exclusion had simply kept pace with inflation, it would now be around $660,000 for individuals and $1.32 million for couples.
For now, the bill is just a proposal, but it’s starting a conversation that’s long overdue.
Bottom line: If you’ve owned your home for a long time and are thinking about selling, this is a policy change worth watching. And if you'd like to better understand how capital gains could affect your sale or whether now is the right time to list, I'm happy to walk you through your options.
**Grant Leichtfuss is NOT a tax professional. Readers are encouraged to seek the assistance of a qualified tax professional**
