H.R.1340 - More Homes on the Market Act (119th Congress)
Summary
H.R.1340, 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. The bill aims to double the existing exclusion amounts, raising them to $500,000 for individuals and $1,000,000 for married couples filing jointly. It also includes a provision for adjusting these amounts for inflation, starting after 2024, based on the cost-of-living adjustment.
The bill specifies that the amendments will apply to sales and exchanges occurring after the date of enactment. This adjustment seeks to provide homeowners with increased tax relief when selling their homes, potentially incentivizing more people to put their homes on the market.
The bill was introduced in the House of Representatives and referred to the Committee on Ways and Means.
Expected Effects
The primary effect of this bill, if enacted, would be to reduce the capital gains taxes paid by individuals and married couples when selling their primary residence. This could lead to increased disposable income for sellers and potentially stimulate the housing market by encouraging more sales.
By increasing the exclusion and adjusting for inflation, the bill aims to keep pace with rising home values and provide more substantial tax relief over time. This could particularly benefit those in high-cost areas where gains from home sales are more significant.
Potential Benefits
- Increased Tax Relief: Homeowners could realize greater tax savings when selling their primary residence, increasing their disposable income.
- Stimulated Housing Market: The increased exclusion may incentivize more homeowners to sell, increasing housing supply.
- Inflation Adjustment: The provision for inflation adjustment helps maintain the real value of the exclusion over time.
- Simplified Tax Process: By increasing the exclusion amount, fewer homeowners will need to calculate and pay capital gains taxes on home sales.
- Potential Economic Boost: Increased housing market activity could lead to a ripple effect, benefiting related industries such as construction and real estate.
Potential Disadvantages
- Reduced Government Revenue: Increasing the exclusion could decrease the amount of capital gains tax revenue collected by the government.
- Potential for Inflation: Increased demand in the housing market, driven by sellers, could contribute to inflationary pressures.
- Disproportionate Benefit: The benefits may disproportionately favor higher-income individuals who own more expensive homes.
- Complexity in Implementation: The inflation adjustment mechanism could introduce complexity in tax calculations.
- Uncertainty in Long-Term Impact: The long-term effects on the housing market and overall economy are difficult to predict.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to improve economic conditions for homeowners. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States, as per Article I, Section 8, Clause 1. This bill falls under Congress's power to modify the tax code.
However, the Constitution does not explicitly address specific tax policies like capital gains exclusions. The bill does not appear to infringe on any specific individual rights or liberties protected by the Bill of Rights.
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).