If the United States government forces an owner to sell their property through eminent domain or condemnation for a public project, the owner would not have to report the money as taxable income on their tax return under legislation proposed on Feb. 25 by U.S. Rep. Ben Cline (R-VA).
“When eminent domain is used, property owners are already navigating a difficult process through no fault of their own,” said Rep. Cline. “The federal government should not increase that burden by taxing a transaction into which they did not voluntarily enter.”
The congressman sponsored the No Tax on Takings Act, H.R. 7687, alongside four Republican cosponsors to make such sales tax-free, preventing citizens from being subjected to “fair market value” for their property, and then requiring them to pay capital gains taxes on any proceeds from the mandated sale.
“Families should never be hit with a federal tax bill after the government forces them to sell their own property,” Rep. Cline said. “My bill delivers a simple, common-sense fix to the tax code to ensure Americans are treated fairly and protected from punitive tax consequences when their property is taken.”
The National Taxpayers Union and the Conservatives for Property Rights support H.R. 7687, which has been referred for consideration to the U.S. House Ways and Means Committee.