A major barrier stalling the U.S. housing market is the outdated capital gains exclusion from home sales, which has remained fixed at $250,000 for individuals and $500,000 for couples since 1997—long before home values skyrocketed. Current data from the National Association of REALTORS® indicate that 34% of homeowners already exceed the single-filer cap, with projections showing nearly 70% will reach it by 2035. This “stay-put penalty” disproportionately impacts long-term owners—especially seniors with low mortgage rates—trapping housing inventory and squeezing younger buyers out.

Congress is now considering the bipartisan More Homes on the Market Act, which proposes doubling the exclusions to $500,000 for singles and $1 million for couples, with future inflation indexing to prevent recurring issues. Advocates argue this reform would make it financially viable for equity-rich owners to sell their homes, thereby refreshing the housing supply and easing affordability constraints for entry-level buyers.

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SOURCE:
Rauber, M. (2025, June 9). Outdated Tax Rules Are Freezing the Housing Market—and It’s About to Get Way Worse. REALTOR® Magazine. Retrieved from https://www.nar.realtor/magazine/real-estate-news/outdated-tax-rules-are-freezing-the-housing-market-and-its-about-to-get-way-worse

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