President Donald Trump is considering endorsing a bill that would eliminate the capital gains tax on home sales in the United States.
The President has spoken favorably about the proposal on two separate occasions this month, indicating that eliminating the tax on capital gains would provide sufficient incentive for homeowners to list their properties for sale.
Earlier this month, Representative Marjorie Taylor Greene, a Republican from Georgia, introduced the “No Tax on Home Sales Act” (H.R. 4327), which aims to adopt housing policies similar to those in Canada and Switzerland to increase housing supply in the United States.
Under Greene’s proposed legislation, if a home is the primary residence of the homeowner, any profits from the sale of the home would be exempt from capital gains tax, regardless of the amount.
Greene stated, “The capital gains tax on home sales is an outdated practice that places an unfair burden on sellers, especially in today’s booming real estate market. My bill aims to address this issue.”
Due to Congress being in recess, the bill has not undergone any hearings or final markup processes, so it remains uncertain how much support it will garner in Congress.
Meanwhile, Greene expressed gratitude for President Trump’s support. “Thank you, President Trump! Thank you for backing my No Tax on Home Sales Act!” Greene wrote on her platform. “You’ve put effort into this. We need your continued support to see this bill through!”
For years, the federal government has taxed owners based on their income levels through long-term and short-term capital gains tax rates.
Capital gains tax includes exempt portions where individual filers can be exempt up to $250,000, and joint filers up to $500,000.
If a married couple bought a four-bedroom home in the 1990s for $400,000 and sold it in 2025 for $1.2 million, resulting in $800,000 in capital gains, according to current law, they could be exempt up to $500,000, leaving $300,000 to be taxed.
At a 20% capital gains tax rate, they would owe $60,000 in taxes. Greene’s proposed bill would eliminate this tax burden, saving them the full $60,000 tax payment.
It is worth noting that these exemption levels have not been updated in nearly 30 years. Data from the real estate industry shows that millions of homeowners have surpassed these tax-exempt thresholds.
According to the National Association of Realtors, one-third of homeowners nationwide (approximately 29 million people) own assets exceeding the $250,000 tax-exempt limit.
Additionally, 10% of homeowners (about 8 million people) have assets sufficient to exceed the $500,000 tax-exempt limit.
The association projects that by 2030, over half (56%) of homeowners will have assets surpassing the $250,000 tax-exempt limit.
The National Association of Realtors also highlighted that in high-priced markets like California and Massachusetts, this trend is even more pronounced.
Within the next decade, over 40% of homeowners in 20 states in the US could potentially face capital gains taxes as their homes accumulate enough equity over time.
Shannon McGahn, the association’s Executive Vice President and Chief Advocacy Officer, stated that they welcome any serious proposals to address the capital gains threshold issue.
“This is not about speculation but about fairness,” McGahn said in a statement to The Epoch Times. “Homeowners should not be taxed like investors. This is to protect fairness and help the entire market operate more efficiently.”
“The remarks by President Trump reflect the growing momentum for reform in this area, and we are pleased to see this issue receive attention at the highest levels.”
Industry experts have long advocated for the elimination of the capital gains tax on home sales to help alleviate the widespread supply pressures in the American real estate market.
For years, the United States has faced a shortage of overall housing construction. Coupled with the Federal Reserve’s decision to lower interest rates to zero at the onset of the global pandemic caused by the COVID-19 virus, a “lock-in effect” emerged, hindering homeowner mobility and contributing to the current housing situation in the US.
The tight market has led to soaring home valuations. According to data from popular real estate platform Redfin, the median home price in the US is $447,435, representing an increase of over 40% compared to five years ago.
While there has been some improvement in housing supply recently, active inventory in June (total homes listed for sale) grew by nearly 29% year over year.
However, according to data from real estate agent website Realtor.com, active inventory is still over 11% lower than in June 2019.
The website reported that the data for homes taken off the market by sellers has also surged by 35% so far this year, outpacing the growth in active inventory.
Chief Economist at the website, Danielle Hale, mentioned, “Buyers will see that there are more choices now compared to the last few years, but many sellers, seeing what they expect to be peak pricing, and with strong assets backing them up, are deciding to wait if they can’t get their number.”
From this perspective, the capital gains tax, dubbed the “stay-put penalty” by housing economists, stifles homeowners’ willingness to list their homes for sale on the open market.
McGahn pointed out that this ultimately squeezes younger generations of homebuyers, creating pressure on housing prices. Eliminating the capital gains tax on home sales could stimulate housing turnover.
“The stagnant housing turnover is affecting the entire market. This drives up housing costs and limits opportunities for buyers, contrary to what public policy should encourage,” McGahn stated. “And this situation worsens every month.”
While some worry that canceling the capital gains tax would only benefit high-income households, McGahn noted that many middle-class families are also penalized by the capital gains tax since “in rapidly appreciating markets, they can only hold onto their homes for the long term.”
Investor Kevin O’Leary referred to the bill as a matter of “common sense.” “Not taxing capital gains on primary residences means young families can grow without penalties,” he wrote on his platform. “Want people to apply for mortgages and build wealth? Then don’t tax them heavily when they transact. This is common sense.”
President Trump, on the other hand, believes that if the Federal Reserve is willing to lower interest rates to alleviate the pressure of mortgage loans, then canceling federal capital gains tax may not be necessary in the end.
During a meeting on July 22 with Philippine President Ferdinand Marcos Jr., Trump stated, “If the Fed would drop rates, we might not even have to do this.”
As of the week ending on July 17, the average rate for a 30-year fixed-rate mortgage in the US stood at 6.75%, showing little change from a year prior.