Trump Pitches Elimination of Capital Gains Tax on Home Sales

Donald Trump has a plan to reinvigorate the housing market: do away with the capital gains tax on home sales.

The president made his pitch during an Oval Office session on Tuesday, Bloomberg reported. Trump said it was something his administration was considering, but it’s unclear precisely what stage those conversations are in, or how the administration would accomplish that goal.

Besides, it shouldn’t even be necessary, according to Trump, who took aim at a familiar punching bag in recent weeks.

“If the Fed would lower the rates, we wouldn’t even have to do that,” Trump said.

Two weeks ago, Rep. Marjorie Taylor Greene introduced the No Tax on Home Sales Act, proposing the elimination of the federal capital gains tax on the sale of a primary residence, according to Realtor.com.

Ostensibly, the bill could be a boost to home sales; approximately one in three homeowners have more equity than the federal capital gains tax exclusion for single filers, putting 29 million households at risk of being taxed up to 20 percent on a home sale.

Due to a 1997 law, a homeowner can sell their primary residence and be exempt from capital gains taxes on the first $250,000 for a single filer and $500,000 for married joint filers. The exemption, however, is only allowed to be used once every two years.

The National Association of Realtors typically backs efforts to overhaul the federal capital gains tax system. NAR estimates that by 2030, 56 percent of homeowners will hit the $250,000 threshold and nearly 23 percent will exceed the $500,000 mark; by 2035, those numbers hit 70 percent and over 38 percent, respectively.

The issue of the capital gains tax on home sales is rooted in a law that feels outdated in the contemporary housing market. When the exclusion was set, the median home price was $145,000, according to Realtor.com. The median price in the country today is above $360,000.

The law doesn’t account for inflation. If it did, the exemptions would be around $660,000 for individuals and $1.32 million for joint filers.

— Holden Walter-Warner