The "More Homes on the Market Act" was introduced on September 29th by Jimmy Panetta (D-CA) and Mike Kelly (R-PA), proposing increases in the capital gain exclusion amounts. Under this bill, the exclusion amount of the sale of a principal resident for single filers would increase to $500,000 (now $250,000) and to $1 million (now $500,000) for joint filers.
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| Homes May Benefit from New Capital Gains Bill |
This bill would provide tax relief for California homeowners, who are experiencing one of the highest cost markets in the nation, who have been unable or not wanting to move because of the large tax burden that could result if they sold in the current market. Senior citizens are more likely to face a larger tax burden since they have on average lived in their homes longer than younger age groups.
The current capital gains exclusion was passed 25 years ago, with no indexing for inflation, in a different market which was not experiencing such huge equity gains. According to Rep. Panetta, "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," amounts similar to the current proposed exclusion. The new proposed bill does include indexing for inflation.
The current capital gains rate is concurrent with fewer homes are on the market, which has contributed to higher demand and higher prices. The National Association of Realtors estimates that single (95%) and married homeowners (68%) who purchased before 2000 could face capital gains tax if they sold their homes this year.
Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996
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