President Trump has recently stated that his administration is considering removing capital gains taxes on home sales as a measure to boost the housing market. In response, Representative Marjorie Taylor Greene (R-GA) has introduced the No Tax on Home Sales Act, which reflects the president’s proposal.
Directors Jordan Haring and Thomas Kingsley from the American Action Forum have analyzed the provisions of this bill and discussed its possible impact on both the housing market and supply. They point out that low housing inventory remains the main factor behind high house prices. “Low housing inventory is the most significant single driver of elevated house prices, and Congress must examine the root causes impacting housing supply,” they said.
Haring and Kingsley argue that one area deserving more attention is how home sales are taxed. They note, “One particularly fertile avenue of exploration should be the tax treatment of home sales, which has not undergone meaningful review in nearly 30 years.”
The directors also suggest that changing or removing current limits on capital gains exclusions for primary residences could increase home sale activity. As they state, “Removing or amending the cap on the dollar amount that can be excluded in capital gains on the sale of primary residences could spur significant home sale activity, as this would counter the ‘stay-put penalty’ disincentivizing many from leaving their homes.”
