The More Homes on the Market Act aims to make it easier for homeowners to sell their homes by increasing the tax-free amount they can exclude from the sale of their primary residence. By doubling the capital gains exclusion, this bill hopes to encourage more homeowners to sell, potentially increasing the number of homes available for buyers.
What This Bill Does
The More Homes on the Market Act proposes changes to the tax code that could have a big impact on homeowners looking to sell their primary residence. Currently, if you sell your home and make a profit, you can exclude up to $250,000 from your taxable income if you're single, or $500,000 if you're married and filing jointly. This bill would double those amounts to $500,000 for single filers and $1,000,000 for married couples.
These changes are meant to reflect the rise in home prices and inflation since the original exclusion amounts were set back in 1997. The bill also includes a provision to adjust these amounts for inflation starting in 2024, which means the exclusion amounts could increase over time to keep up with the cost of living.
The goal is to encourage more homeowners, especially those who have owned their homes for a long time and seen significant appreciation, to sell. By reducing the tax burden on the sale of their homes, it could make it more financially attractive for them to move, potentially freeing up more homes for sale.
Why It Matters
For many homeowners, selling a home can be a daunting process, especially when considering the taxes owed on the sale. This bill could make it easier for homeowners to sell by allowing them to keep more of the profit from their home sale. This is particularly beneficial for older homeowners who might be looking to downsize or move to a different area.
Younger buyers and first-time homebuyers could also benefit indirectly. By increasing the number of homes on the market, there could be more options available, potentially lowering competition and prices. In areas with high housing demand and low inventory, this could make a significant difference.
Key Facts
- Cost/Budget Impact: No official cost or budget impact has been provided, but it could reduce federal revenue.
- Timeline for Implementation: The changes would apply to sales and exchanges after the bill's enactment, with inflation adjustments starting after 2024.
- Number of People Affected: Primarily affects homeowners with significant home equity, particularly in high-cost areas.
- Key Dates: Introduced on February 13, 2025, and referred to the House Ways and Means Committee.
- Bipartisan Support: The bill has 50 cosponsors, including 33 Democrats and 17 Republicans.
- Historical Context: The current exclusion amounts were set in 1997 and have not been adjusted for inflation since.
- Real-World Impact: Could save homeowners thousands in taxes, making it easier to move for jobs, family, or retirement.
Arguments in Support
- Encourages Home Turnover: By increasing the tax-free exclusion, it reduces the financial penalty for selling appreciated homes, encouraging more homeowners to sell.
- Adjusts for Inflation: The bill updates the exclusion amounts to reflect the rise in home prices and inflation since 1997.
- Benefits Middle-Class Families: More homes on the market could lower competition and prices, making it easier for families to buy homes.
- Bipartisan Support: With support from both Democrats and Republicans, the bill promotes homeownership without new government spending.
- Supports Real Estate Markets: Real estate groups back the bill, noting it could boost transactions and affordability efforts.
Arguments in Opposition
- Potential Revenue Loss: Critics might argue that increasing the exclusion could reduce federal revenue, impacting government budgets.
- Benefits Higher-Income Homeowners: There is a concern that the bill might primarily benefit wealthier homeowners with large capital gains.
- Minimal Impact on Inventory: Some might argue that other factors, like high mortgage rates, could limit the bill's effectiveness in increasing housing inventory.