Will Home Sellers Be Spared from Capital Gains Tax? Trump Signals Shift
Overview
On July 22, 2025, President Donald Trump indicated that his administration may pursue a proposal to eliminate the capital gains tax on home sales, aligning himself with legislation introduced by Representative Marjorie Taylor Greene. Greene’s “No Tax on Home Sales Act” calls for removing the tax on profits from selling primary residences. Trump referenced the idea during a discussion with the President of the Philippines, signaling potential support for the measure.
Why This Matters Now
The current federal tax code allows homeowners to exclude up to $250,000 (or $500,000 for married couples) in gains from the sale of their primary residence. However, these exemption limits have not been updated since 1997, despite substantial increases in home values nationwide. This disconnect between policy and current real estate realities has created what some economists call a “lock-in effect”—where homeowners delay selling to avoid steep tax bills on appreciated homes.
In high-cost areas such as California, this has had a particularly strong impact. Retirees and long-time homeowners often hesitate to downsize or move, fearing tax liabilities that can run into the hundreds of thousands of dollars. One couple, for instance, reported an estimated capital gains tax of nearly $700,000, which ultimately caused them to postpone their move.
Potential Market Impact
Proponents of the tax elimination argue that such a policy could encourage more homeowners to list their properties, easing the national housing shortage and unlocking inventory that would otherwise remain off the market. This could potentially improve affordability and mobility, especially in regions where rising home prices have outpaced wage growth and new housing development.
However, critics warn that the benefits of such a move may disproportionately favor wealthier homeowners with significant built-up equity. There are also concerns about the broader economic consequences, including reduced federal tax revenue and the risk of overheating certain housing markets without fundamentally solving supply constraints.
Conclusion
The idea of eliminating capital gains tax on home sales is gaining political momentum, with former President Trump voicing support for the concept. While the proposal may provide financial relief to long-time homeowners and retirees, its broader implications for affordability, fairness, and fiscal responsibility remain under debate. Any actual change would require Congressional approval and could become a focal point in upcoming policy discussions.
Original article: No tax on home sales? Here’s why Trump may scrap capital gains tax on housing