The "More Homes on the Market Act" increases the tax exclusion for profit from the sale of a primary residence, incentivizing homeowners to sell and increasing housing supply.
Jimmy Panetta
Representative
CA-19
The "More Homes on the Market Act" increases the tax exclusion for profit from the sale of a primary residence, raising it to $500,000 for single filers and $1,000,000 for married couples filing jointly. These amounts will be adjusted for inflation starting in 2025. This change encourages homeowners to sell their properties, thereby increasing the availability of homes on the market.
Home Sellers Can Keep More Cash: New Bill Doubles Tax-Free Profits on Home Sales
The "More Homes on the Market Act" is pretty straightforward: it lets homeowners pocket more money when they sell their primary residence. Starting now, single filers can exclude up to $500,000 in profit from capital gains taxes (up from $250,000), and married couples filing jointly can exclude up to $1,000,000 (up from $500,000). That's a big jump, and it's designed to encourage more people to put their homes on the market.
Cash in Your Pocket
The main idea here is to boost the housing supply by giving homeowners a bigger tax break. Think of someone who bought a house in a now-expensive city years ago for $300,000, and it's now worth $900,000. Before this bill, a single filer would pay capital gains taxes on $350,000 of that profit. Now, they'd owe nothing. That's a serious incentive to sell, potentially freeing up homes for younger buyers or those looking to move.
Keeping Up with the Times
Starting in 2025, these exclusion amounts will also get adjusted for inflation. This means the tax-free profit limits will likely increase over time, reflecting the rising cost of living (SEC. 2). This is important because it keeps the law relevant, preventing the tax break from losing value as prices go up.
Real-World Ripple Effects
This bill could be a game-changer for people who've owned their homes for a while, especially in hot markets. It might be particularly helpful for those who are downsizing, moving to a lower-cost area, or need the extra cash for retirement. However, it’s worth noting that those who have recently purchased homes won’t be able to take advantage of this for a few years. You need to live in the home for two of the last five years to call it your primary residence. Overall, though, by potentially increasing the number of homes for sale, the bill could help ease some of the pressure on the housing market, making it slightly easier for buyers to find a place.