Potential Abolition of Capital Gains Tax on Home Sales on the Horizon: Crucial Information You Should Be Aware Of
Rep. Marjorie Taylor Greene (R-Ga.) has introduced the No Tax on Home Sales Act, a bill aimed at eliminating federal capital gains tax on the sale of primary residences. The bill, introduced on July 10, 2025, is currently under review by the House Committee on Ways and Means.
The proposed act could have significant implications for the housing market. By eliminating the capital gains tax, it would unlock home equity for millions of homeowners who currently face taxes exceeding the outdated exclusion limits ($250,000 for individuals, $500,000 for joint filers), which have not changed since 1997.
The act could also encourage more home sales, particularly among seniors and long-term homeowners, easing inventory shortages and stimulating broader economic activity. However, the bill has sparked debate regarding who would benefit from this tax elimination and whether it can pass Congress.
Currently, only about 10 to 15 percent of homeowners have capital gains on their primary residences that exceed the federal tax exclusion limits. Homeowners in states with high capital gains tax rates, such as California or New York, may still face substantial tax bills when they sell their primary residences.
If enacted, the No Tax on Home Sales Act would primarily affect wealthier and older homeowners with homes averaging $1.4 million and capital gains above the exemption at around $430,000. It's worth noting that families who work hard, build equity, and sell their homes would not be punished with massive tax bills under this proposed legislation.
The existing supply of single-family homes remains relatively tight, and some policymakers argue that removing or raising the tax exclusion limits could make moving more affordable for some homeowners and boost housing turnover. However, it's uncertain whether Congress will act on this idea.
President Donald Trump has expressed support for a similar proposal, stating he is "thinking about eliminating the tax on capital gains from houses." Soaring home values in many areas have led to more homeowners unexpectedly facing capital gains tax liability when selling their properties.
It's important to note that the No Tax on Home Sales Act would not be retroactive and would take effect for sales and exchanges occurring after its passage. Eligible homeowners can currently take advantage of the home sale exclusion, up to $250,000 ($500,000 for married couples) in profit from selling a primary home can be excluded from federal capital gains tax if IRS rules are met.
The potential impact of the No Tax on Home Sales Act could be substantial, unlocking home equity for millions of homeowners, encouraging more home sales, easing inventory constraints, and stimulating broader economic activity. However, the bill's progress through Congress remains uncertain.
The No Tax on Home Sales Act, if passed, could lead to a surge in investing opportunities within the real estate market, as the elimination of capital gains tax may encourage more home sales. This could particularly impact politics, as the proposed legislation has sparked debate about its fairness and potential passing in Congress. Meanwhile, general-news outlets are closely following the bill's progress through the House Committee on Ways and Means.
