More Homes on the Market Act
Summary
The "More Homes on the Market Act" proposes to amend the Internal Revenue Code of 1986 by increasing the exclusion of gain from the sale of a principal residence. Specifically, it raises the exclusion from $250,000 to $500,000 for individuals and from $500,000 to $1,000,000 for married couples filing jointly.
The bill also includes a provision for adjusting these amounts for inflation, starting in 2025, based on the cost-of-living adjustment. The adjustment uses 2024 as the base year for calculating inflation.
The bill was introduced in the Senate on December 3, 2025, and referred to the Committee on Finance.
Expected Effects
If enacted, this act would reduce the amount of capital gains taxes paid by individuals and couples when selling their primary residence. This could incentivize more homeowners to sell, potentially increasing the supply of homes on the market. The inflation adjustment would help maintain the real value of the exclusion over time.
Potential Benefits
- Increased Tax Savings: Homeowners could save significantly on capital gains taxes when selling their primary residence.
- Incentive to Sell: The higher exclusion could encourage more homeowners to sell, increasing housing supply.
- Inflation Adjustment: The inflation adjustment helps preserve the value of the exclusion over time.
- Potential Economic Stimulus: Increased home sales could stimulate economic activity in related sectors.
- Simplified Tax Filing: Clearer guidelines on capital gains exclusion simplify tax filing for homeowners.
Potential Disadvantages
- Revenue Loss: The increased exclusion could reduce federal tax revenue.
- Potential for Price Inflation: Increased demand due to tax savings could lead to higher home prices.
- Disproportionate Benefit: Higher-income homeowners with larger gains benefit more from the exclusion.
- Complexity in Calculation: The inflation adjustment adds some complexity to calculating the exclusion.
- Uncertainty of Market Response: The actual impact on housing supply is uncertain and depends on various market factors.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to improve housing market conditions and provide tax relief to homeowners. Article I, Section 8 grants Congress the power to lay and collect taxes, and this bill modifies existing tax laws related to capital gains. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).