A bipartisan proposal in Congress aims to address one of the housing market’s biggest challenges: limited inventory.
For years, homeowners have faced a difficult decision: stay in their current home and preserve the equity they have built, or sell and potentially face a significant capital gains tax bill. The More Homes on the Market Act seeks to address that concern by updating the federal tax exclusion for gains on the sale of a primary residence.
The legislation, H.R. 1340 in the House and S. 3332 in the Senate, would double the current capital gains exclusion from $250,000 to $500,000 for single filers and from $500,000 to $1 million for married couples filing jointly. The legislation would also index the exclusion amounts to inflation going forward.
The National Association of REALTORS® estimates that nearly 13 million homeowners could face a tax penalty if they sold their homes today. Supporters of the More Homes on the Market Act argue that updating the exclusion could encourage more longtime homeowners to sell, bringing additional properties into an already constrained housing market.
For REALTORS®, the potential impact is significant. More listings could mean more choices for buyers, improved opportunities for families looking to move, and greater movement throughout the housing market.
At this time, neither bill has received a committee markup or a vote in its chamber. In other words, the legislation has not yet advanced to the House or Senate floor and is not yet law. The next significant step would be for the Ways and Means Committee or Senate Finance Committee to consider the legislation and potentially hold a hearing or markup.
The bottom line: The More Homes on the Market Act seeks to modernize a nearly 30-year-old tax provision and remove one potential barrier that may be keeping homes off the market. As Congress considers additional ways to improve housing affordability and availability, REALTORS® will continue to advocate for policies that expand inventory and create greater opportunities for buyers and sellers.