Proposed changes to capital gains tax: What it could mean for your home sale

Lawmakers from both parties have proposed changes, which are under debate.

• Congresswoman Marjorie Taylor Greene wants to eliminate the tax.
• Congressman Jimmy Panetta wants to double the limits to $500,000 and $1 million and adjust them for inflation.

To qualify for the tax exclusion, you must have lived in your home for at least 2 of the past 5 years. Sellers who exceed the limit pay 0–20% tax depending on income.

Supporters say raising or removing the tax would encourage more homeowners—especially in high-cost states like California, Hawaii, and D.C.—to sell, potentially increasing supply. Critics note that most benefits would go to wealthier households.

Homeowners can reduce taxable gains by including qualified improvement costs, closing fees, and certain purchase expenses in their calculations.

If limits go up, more homeowners could sell & keep more profits—especially in pricey markets.

Pro Tip: No matter what happens with the law, track every improvement and closing cost to help cut your capital gains tax.