Senior officials in the Trump administration have publicly explored the possibility of reducing capital gains taxes on home sales, with National Economic Council Director Kevin Hassett and Fox Business host Larry Kudlow discussing the proposal during a Tuesday broadcast. Kudlow indicated that President Trump had expressed interest in indexing capital gains to inflation and modifying the capital gains tax treatment for residential property sales to allow homeowners to shield additional profits from taxation.
Lawmakers from both parties have introduced measures addressing this issue in recent months. A bipartisan proposal called the More Homes on the Market Act, introduced in early 2025, would increase the capital gains exemption for primary home sales and adjust it annually for inflation. Another proposal, the No Tax on Homes Sales Act, would eliminate capital gains taxes entirely on primary residence sales. Both measures remain under committee review.
Current law permits homeowners to exclude up to $250,000 in gains for single filers and $500,000 for married couples from capital gains taxation when selling a primary residence, provided certain conditions are met. Gains exceeding these thresholds are subject to long-term capital gains rates of 0%, 15%, or 20% depending on income level. These exemption amounts have remained unchanged since 1997.
Experts caution that any legislative changes would face significant obstacles. Financial planners note that enacting tax law modifications before midterm elections is extremely unlikely given the compressed timeline and recent difficulties in advancing legislation through Congress. Additionally, analysis suggests that the benefits of increasing exemptions would predominantly accrue to wealthier homeowners, with approximately 10% of homeowners in 2022 reporting gains exceeding current exemption levels, and those households averaging a net worth of roughly $5.7 million.
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