The housing market is stagnant, and while people are staring at interest rates as the culprit, there’s a second culprit: a capital gains tax bill Washington wrote in 1997 and has left alone since. Congress has a chance to fix that with a bill that would index capital gains taxation on home sales for inflation. It’s overdue. Congress hasn’t touched the law in 29 years.Current law allows individuals to exclude up to $250,000 and married couples up to $500,000 from capital gains tax on the sale of their homes. That standard was set in 1997 and hasn’t moved since. Congress is often accused of kicking the can down the road, but here, they haven’t even done that. It’s an anomaly: The standard deduction, retirement contribution limits, and other parts of the tax code get annual inflation adjustments. Homes are put on the market, sold, and part of transactions every single day in America. You’re likely to see a for-sale sign in someone’s yard on your way to work. Yet, the tax code has left homeowners behind with a law that hasn’t been updated since before iPhones existed.
There’s a fix, and it’s a conservative one: cut the tax, index it, and get out of the way. The More Homes On The Market Act is a bill that would do exactly that. It carries bipartisan support, and it’s a Republican-led effort. It would raise the thresholds to $500,000 for individuals and $1,000,000 for married couples, then index both automatically for inflation going forward. The median home price was $139,000 in 2000 and has risen to $417,700 today. That’s a 200% increase with no adjustment to the tax exclusion, meaning Washington has quietly raised taxes on homeowners for three decades without a single vote.
