Trump Considers Ending Capital Gains Tax on Home Sales to Boost Housing Market

President Trump is considering a proposal to eliminate capital gains taxes on home sales to boost the housing market. He was asked about the plan by a reporter from the conservative Real America's Voice network, who mentioned a bill introduced by Rep. Marjorie Taylor Greene. Under current law, homeowners can exclude up to $250,000 from taxable income on primary homes, but this amount has not been raised since 1997.

President Donald Trump has floated the possibility of eliminating the federal capital gains tax on home sales, a move that could significantly alter the way real estate profits are taxed. Speaking to reporters in the Oval Office on July 22, 2025, Trump suggested that his administration is weighing support for legislation introduced by Rep. Marjorie Taylor Greene (R-GA) that would nix the existing capital gains tax on home sales [1].

Under current tax law, single filers can exclude up to $250,000 in capital gains from sales of their primary homes from their taxable incomes under what's called the Section 121 exclusion. For married couples filing jointly, the amount rises to $500,000 [1]. These thresholds have remained fixed since 1997.

Greene, who introduced the No Tax on Home Sales Act, argues that the current policy is an "outdated, unfair burden," especially in today's housing market where values have skyrocketed [1]. She believes that eliminating the tax would unlock equity, help fix the housing shortage, and support long-term financial security for American families.

According to a study from the National Association of Realtors (NAR), the current federal policy on the capital gains tax on home sales is "quietly distorting the housing market" by "locking in older homeowners and strangling inventory just when America needs it most" [1]. The study found that 34% of homeowners, or 29 million Americans, would exceed the $250,000 threshold if they sold their homes, while 10%, or eight million Americans, would surpass the $500,000 threshold for joint filers. This disincentivizes older homeowners from selling their homes, leading to a "stay-put penalty" that keeps housing inventory tied up [1].

Critics argue that eliminating the tax would primarily benefit wealthy Americans who can afford to pay tax on gains from home sales that exceed the limit [1]. Joel Berner, senior economist at Realtor.com, suggests that the measure would not significantly impact regular families unless their homes have appreciated by more than $1 million [1].

However, Berner also notes that abolishing the federal tax could release inventory onto the housing market, potentially benefiting regular homeowners [1]. It could also attract increased interest from investors and speculators, which could drive up home values and contribute to the nation's housing affordability problem [1].

As of now, the White House has not provided additional comments on Trump's remarks. The proposal remains under consideration, and its potential impact on the housing market and the broader economy is still a topic of debate among financial professionals and policymakers.

References:
[1] https://www.cbsnews.com/detroit/news/trump-capital-gains-tax-home-sales/
[2] https://www.reuters.com/business/us-considering-removing-tax-capital-gains-home-sales-trump-says-2025-07-22/
[3] https://www.forbes.com/sites/tylerroush/2025/07/22/trump-thinking-about-ending-capital-gains-tax-on-home-sales-why-that-could-impact-millions-of-homeowners/