The bipartisan More Homes on the Market Act, recently proposed by U.S. Reps. Mike Kelly (R-PA) and Rudy Yakym (R-IN), aims to make housing more available and affordable for Americans.
“As housing prices have increased, people who have chosen to downsize have been unfairly punished with massive tax burdens,” said Rep. Kelly, lead original cosponsor of H.R. 1340. “After years of making improvements and investments into their homes, which is the largest purchase for most Americans, homeowners deserve to keep more of their hard-earned money during their golden years.”
If enacted, H.R. 1340 would update the tax code to incentivize homeowners to sell their properties, increase the housing supply, and alleviate affordability challenges in communities across the country, according to a bill summary provided by the lawmakers.
Specifically, the bill would raise the capital gains tax exclusion on the sale of a primary residence from $250,000 to $500,000 for single filers and from $500,000 to $1 million for joint filers.
These thresholds, originally set in 1997, have never been adjusted for inflation, making it increasingly difficult for homeowners, especially seniors and middle-class families, to sell without facing significant tax burdens, the summary says.
“Amid rising housing prices and inflation, Americans that have opted to downsize have faced unfair tax burdens,” Rep. Yakym said. “I am pleased to co-lead this legislation, which provides meaningful tax relief for seniors and others looking to downsize by doubling the capital gains tax exclusion for the sale of a principal residence.
“Hard-working Americans deserve to be able to save their resources as they simplify their lives,” he added.
U.S. Rep. Jimmy Panetta (D-CA) on Feb. 13 sponsored H.R. 1340 with 27 original cosponsors, including Rep. Kelly, Rep. Yakym, and U.S. Reps. Maria Elvira Salazar (R-FL), Don Bacon (R-NE), and Brian Fitzpatrick (R-PA).
“As home prices rise and tax exemptions stay the same, homeowners feel financially locked into their homes and homebuyers feel locked out of the housing market,” Rep. Panetta said. “By modernizing the capital gains exclusion, our bipartisan More Homes on the Market Act will enable more people to sell their homes, downsize if they choose, and retain the savings they’ve built over a lifetime.”