Baby boomers and other Americans who have been staying put in their homes for decades could get some encouragement to finally sell, thanks to two nearly identical bills in the House and Senate that are gaining more bipartisan traction.
Congress has been weighing a pair of bills, both dubbed the More Homes on the Market Act, that propose doubling the amount of capital gains that taxpayers can exclude from their gross income when they sell their primary residence. By expanding this tax exclusion for sellers, lawmakers are hoping to increase the inventory of homes on the market and address Americans’ concerns about housing affordability.
Thanks to a handful of lawmakers on both sides of the political aisle who co-sponsored both the House and Senate versions last week, these bills now have the support of about one-third of the members of Congress. The only difference in the bills is how they adjust for inflation.
In either case, the tax savings could be significant for longtime homeowners who may be reluctant to sell because of the associated tax penalty. Whereas single tax filers can currently exclude up to $250,000 in capital gains, these bills propose doubling that amount to $500,000. Meanwhile, married couples filing jointly could exclude up to $1 million in capital gains, double the current $500,000 limit.
That section of the tax code has not been updated since 1997, even though home prices have roughly tripled over that time. About one-third of homeowners have amassed more equity in their homes than the current $250,000 capital gains tax exclusion provides for single filers, according to a 2025 analysis by the National Association of Realtors. And that share could grow to 56% by 2030.
GROWING BIPARTISAN SUPPORT
While the idea of doubling the capital gains tax exclusion has been kicking around Congress for a few years, housing affordability has become a key focal point in Washington, D.C., this year. Lawmakers passed a major housing bill in June that took various steps to make homeownership more attainable.
The House version of the More Homes on the Market Act was introduced by Rep. Jimmy Panetta, a Democrat from California, while the Senate version was introduced by Sen. John Cornyn, a Republican from Texas. The 151 House members who co-sponsored the bill are predominantly Democrats, while the 23 co-sponsors of the Senate version are mostly Republicans.
Even unofficially, the affordability crisis will be on the ballot during the midterm elections in November as both parties aim to ease the concerns of cash-strapped constituents. In addition to bipartisan support among lawmakers, these bills have garnered the support of various trade groups and think tanks for the benefits they could bring to the housing market.
FREEING UP HOUSING FOR FIRST-TIME BUYERS
Some groups, like the think tank Niskanen Center, also hope that Congress will modify inheritance laws. “By changing the tax rules on capital gains from the sale of primary homes and homes passed down to heirs, Congress can help pry open the single-family housing market,” Andrew Justus, a housing policy analyst, wrote last month.
Meanwhile, the National Association of Realtors last month noted that its lobbying efforts have helped to secure dozens of new co-sponsors for this legislation. The Chicago-based trade group has been very vocal about why a higher capital gains tax exclusion will result in much-needed churn in the housing market.
While speaking before a Senate committee in June, Kevin Brown, president of the association, told lawmakers that backing the More Homes on the Market Act would help free up housing inventory for first-time homebuyers—and without the need to “put any shovels in the ground.” He argued that many homebuyers are sitting on the sidelines because they either don’t want to pay the capital gains tax when they sell or can’t afford to do so.
“Just like people were locked into their homes at lower interest rates, seniors are often locked in because of the home equity penalty,” Brown said. “This legislation expands existing housing stock and gives seniors the opportunity to tap equity that they have counted on for retirement.”