WASHINGTON D.C (VINnews)-President Donald Trump said he is exploring legislation that would eliminate the capital gains tax on home sales, a move that could significantly reshape the U.S. housing market and provide relief to homeowners.
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“We’re looking at that. It could be a very big positive… it would be a great incentive for a lot of people who really need money,” Trump told reporters.
Currently, homeowners who sell their primary residence may exclude up to $250,000 in capital gains from taxation, or $500,000 for married couples filing jointly, provided they meet certain conditions. Profits above those thresholds are subject to capital gains tax, which can range from 15% to 20% for most households.
Eliminating the tax altogether would mark a dramatic shift in policy. Supporters argue it could free up more housing inventory by encouraging longtime homeowners to sell, while critics warn it could disproportionately benefit wealthy property owners and cost the federal government billions in lost revenue.
The idea comes as housing affordability remains a top concern across the country, with mortgage rates near multi-decade highs and home prices continuing to rise. Trump has not yet released details on whether the change would apply to all real estate transactions or only primary residences, nor has he said if the proposal would require congressional approval or be pursued through executive action.
This is a very dumb idea.
The tax code already has the 500k exclusion for a couple that resided in their house for at least 2 out of the last 5 years. I would be all for doubling the 500k exclusion to 1 million, but only for the people selling their actual residences, not for the house flippers — i.e. 2 out of 5 years test.
If you get rid of the capital gains tax on houses altogether, what will happen is that hedge funds and all kinds of jerks with access to investors cash will double up on the residential homes market, outbidding all private buyers, which will result in the home prices skyrocketing, and our kids will never be able to afford their own homes.
Even for those of us who already own our homes, the skyrocketing home prices will not make us rich, because when you sell your home, you usually still need to live somewhere else — either rent or purchase — which will eat up everything you made on sale of your previous home.
Why not at the very least index the exclusion to inflation? That should not be controversial at all! The $500k for a couple has been in place since 1997. The equivalent amount in today’s dollars is almost $1,000,000
The Capital Gains tax is especially a killer for people who are nearing retirement and/or who wish to relocate particularly to seniors living communities. Also, especially so, for people who need to seel their larger homes to enable making Chassunos. They’ve worked their whole lives to build a retirement nest-egg only to lose so much of it to this tax. This would really help many of our type families in a big way.
It should be made retroactive to January1, 2025. As is people hoping to take advantage are holding back selling their houses waiting for passage. If made retroactive there would be no need to wait.