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Reps. Kelly, Panetta Reintroduce Bipartisan Legislation to Make Housing More Available and Affordable

March 1, 2023

WASHINGTON, D.C. -- Today, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Committee's Subcommittee on Taxand U.S. Rep. Jimmy Panetta (D-CA) reintroduced the bipartisan More Homes on the Market Act to address ongoing housing affordability issues across the country.  The legislation would amend the tax code to incentivize more homeowners to sell their houses and increase the market supply.

The More Homes on the Market Act ensures homeowners can keep more of their investment when selling their homes by increasing the sales gain tax exclusion to $500,000 for single filers and $1 million for joint filers.  Currently, homeowners who sell their home can only exclude $250,000 in gains from capital gains taxes, or $500,000 in the case of a joint-filing couple, an amount set in 1997 and not indexed for inflation.

 

“As housing prices have increased, people who have chosen to downsize have been unfairly punished with massive tax burdens,” Rep. Kelly said. “After years of making improvements and investments into their homes, which is the largest purchase for most Americans, homeowners deserve to keep more of their hard-earned money during their golden years.”

“I’ve come across way too many people in the 19th Congressional District who want to sell their homes, but can’t afford to due to the financial hit they’ll incur.  That leads to fewer homes on the real estate market, housing shortages, and housing affordability issues throughout my district,” said Rep. Panetta.  My bipartisan More Homes on the Market Act would help remedy that problem by increasing the sales gain exclusion.  Such a simple fix would allow homeowners to downsize, sell their homes, and keep their nest-egg intact.  It’s also a commonsense way to help expand the housing market, tackle housing affordability issues in our communities, and better ensure that more families have access to owning a home.”  

“Failing to index this exemption to inflation eroded its value significantly and caused a chain reaction that exacerbated today’s acute shortage of available homes in the U.S.,” said Kenny Parcell, 2023 President, National Association of REALTORS®.  “Due to the significant tax bills they would face, far fewer older homeowners are selling their residences to downsize or move to retirement facilities, increasing demand and prices and leaving fewer homes available for younger home buyers to purchase.  This legislation nearly restores the exemption to its original intended value, and by indexing it for future inflation, it ensures this unfortunate situation never occurs again.”

 

Summary of the More Homes on the Market Act:

  • The current tax code allows homeowners who sell their home to exclude $250,000 in gains from capital gains taxes, or $500,000 in the case of a joint-filing couple.
  • The current exclusion amount was first set in 1997 and was not indexed to inflation. If it had been indexed for inflation, it would be $461,325 for single filers and $922,650 today.
  • The More Homes on the Market Act increases the exclusion to $500,000 for single filers and $1 million for joint filers.
  • Increasing this exclusion will make it easier for homeowners to sell, getting more homes on the market and increasing housing supply.