Will Home Sellers Finally Get Tax Relief? Two Major Bills Could Reshape the Market

Will Home Sellers Finally Get Tax Relief? Two Major Proposals Could Change Everything

Could Tax Relief for Home Sellers Soon Become Reality?

Homeownership has long been celebrated as a cornerstone of the American dream. Yet for many, selling their homes has turned into a costly tax burden. The current capital gains tax exclusions—$250,000 for single homeowners and $500,000 for married couples—haven’t been updated in nearly three decades, even as home values have soared.

Now, new legislation could finally offer relief. These proposed tax reforms may encourage more homeowners to sell, helping to ease today’s severe housing shortages.

Capital Gains Rules Haven’t Changed Since 1997—But Home Prices Have

The existing exemption thresholds were set by the Taxpayer Relief Act of 1997, a time when home prices were dramatically lower. Back then, most homeowners could sell without worrying about paying capital gains taxes.

But in today’s market, long-term homeowners often sit on hundreds of thousands in equity. Many now face tax bills simply for realizing gains on a home they’ve owned for decades.

According to the National Association of Realtors (NAR), over 29 million homeowners—about 34% of U.S. homeowners—would exceed the current tax exemption if they sold their primary residence today.

How Taxes Are Hurting the Housing Market

High capital gains taxes don’t just hurt homeowners—they ripple across the entire housing market. When homeowners are reluctant to sell, fewer homes go on the market. That limits housing inventory, which in turn pushes prices even higher.

In short: outdated tax laws are keeping people in homes they might otherwise sell—and that’s fueling the affordability crisis.

Proposal #1: “More Homes on the Market Act” Could Double Exemptions

One major proposal now on the table is the bipartisan More Homes on the Market Act, introduced earlier this year. If passed, it would:

• Double the capital gains exemption to $500,000 for single filers and $1 million for married couples

• Tie exemption thresholds to inflation, so they grow over time

• Apply only to primary residences, not to investment properties or vacation homes

This move could provide immediate tax relief and create a long-term solution to keep the thresholds in step with home value growth.

Proposal #2: “No Tax on Home Sales Act” Would Eliminate Capital Gains Taxes Entirely

The second—and more aggressive—proposal is the No Tax on Home Sales Act, which would go even further by completely eliminating capital gains taxes on the sale of a primary residence.

Supporters say this change would unlock massive inventory by removing the #1 barrier holding sellers back: fear of a huge tax bill. If passed, it could significantly help restore balance in the housing market and increase affordability for buyers.

Why This Matters to Homeowners and Buyers Right Now

Both proposals represent a dramatic shift in U.S. housing tax policy. For individual homeowners, it means potentially tens or even hundreds of thousands in savings.

For the housing market as a whole, it means more inventory, moderated price growth, and improved accessibility—especially for first-time buyers stuck on the sidelines.

Outdated Tax Rules Are Making the Housing Crisis Worse

Housing affordability is one of the most urgent issues in today’s economy. Yet millions of would-be sellers stay put, held back by outdated tax rules. Updating or eliminating these capital gains taxes would be a game-changer—motivating people to move, downsize, or relocate without being punished financially.

Will These Tax Breaks Actually Happen?

It’s still uncertain which of the two proposals—if either—will make it into law. But one thing is clear: momentum is growing. Bipartisan support, public concern, and worsening inventory issues are pushing tax relief onto center stage.

If passed, these reforms could become one of the most meaningful housing policy changes in decades. They would give millions of Americans more freedom with their biggest asset—their home—and help bring much-needed balance to the housing market.