Is Capital Gains Reform Coming for Homeowners? Here’s What You Need to Know

Is Capital Gains Reform Coming for Homeowners? Here’s What You Need to Know

If you’ve owned your home for a long time, you may be sitting on a lot of equity—and potentially a big tax bill if you decide to sell. That’s because the current capital gains tax exclusion on home sales hasn’t been updated since 1997.

But that may finally change.

The Issue: Outdated Capital Gains Tax Limits

Current law allows homeowners to exclude up to $250,000 (or $500,000 for married couples) of profit from the sale of their primary residence. The problem? These limits haven’t been adjusted for inflation in 28 years, despite home prices tripling in that time.

This outdated threshold is forcing many long-time homeowners, especially seniors, to hold off on selling, fearing a hefty tax hit. It’s a major reason why much-needed housing inventory is being kept off the market.

Why It Matters for the Housing Market

According to the National Association of REALTORS® (NAR):

• 29 million homeowners could already face capital gains taxes if they sell
• That number could hit 70% by 2035
• Home equity accounts for 60%+ of household wealth in the U.S.

This creates a "lock-in effect," where homeowners stay put rather than lose retirement savings to taxes—further tightening housing supply.

Momentum Builds in Congress

Two key bills are gaining traction:

1. The More Homes on the Market Act
   Would double the current exclusion and adjust it for inflation going forward.
2. The No Tax on Home Sales Act
   A more aggressive proposal to eliminate federal capital gains tax entirely on primary home sales.

Both have bipartisan support, and even President Trump has signaled interest in ending capital gains tax on homes.

What This Means for Boise Homeowners

For local homeowners and potential sellers in the Boise real estate market, this reform could be a game changer, especially for those who’ve built significant equity over the years.

If passed, it would:

•        Unlock housing inventory
•        Help aging homeowners sell without penalty
•        Reduce tax burdens on middle-class families
•        Modernize real estate tax policy nationwide

Bottom Line

This isn’t just a tax issue, it’s a housing market issue. Reforming the capital gains exclusion could help solve the inventory crisis, support financial freedom for retirees, and boost home sales across the country.

Keep an eye on these developments, they could directly impact your real estate plans in the months ahead.

Information from the National Association of REALTORS® (NAR)