{"id":16067,"date":"2026-06-18T19:35:08","date_gmt":"2026-06-18T19:35:08","guid":{"rendered":"https:\/\/siliconvalleymovingpost.com\/?p=16067"},"modified":"2026-06-18T19:35:08","modified_gmt":"2026-06-18T19:35:08","slug":"lawmakers-push-for-higher-capital-gains-exemptions-with-an-eye-on-home-sales","status":"publish","type":"post","link":"https:\/\/siliconvalleymovingpost.com\/?p=16067","title":{"rendered":"Lawmakers push for higher capital gains exemptions, with an eye on home sales"},"content":{"rendered":"
\n

The question I get most asked by many frustrated homebuyers is why we have so few homes for sale.<\/p>\n

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Homes are insanely expensive, especially in Southern California, so buyers are facing bidding wars for the dearth of available turnkey, well-priced properties.<\/p>\n

What\u2019s causing this and how can we shake loose more \u201cfor sale\u201d inventory?<\/p>\n

The cause is the \u201clock-in\u201d effect, which has discouraged a whole lot of Californians from selling their homes, preventing more opportunities for first-time and move-up buyers.<\/p>\n

The \u201clock-in\u201d effect consists of three things: Interest rates have more than doubled since the Covid days, so it\u2019s tough to pry someone away from a low interest rate mortgage; Proposition 13 keeps your property tax low (especially if you bought your palace years ago before the run up of property appreciation); and home sale capital gains tax or the \u201cstay-put\u201d penalty is a significant deterrent to selling.<\/p>\n

Every economist tells me we need more homes built, and we can\u2019t build them fast enough, nor do we have a lot of space to build in certain parts of Southern California.<\/p>\n

One obvious answer is to expand the home sale capital gains tax exemption. Partially or completely getting rid of the capital gains tax will shake loose a lot of potential home sellers, especially the ones who own their homes outright.<\/p>\n

Before diving into the various Congressional bills in play that might reduce or completely squash capital gains, let\u2019s first review the current capital gains rule.<\/p>\n

\n<\/div>\n

The home sale capital gains tax is levied on the net profit of the sale of a primary residence. It\u2019s the original purchase price plus any closing costs on the original buy side and sell side, plus capital improvements subtracted from sales price.<\/p>\n

For example, say you paid $500,000 for your home 10 years ago. Your buy side closing costs were $15,000. You invested $200,000 in capital improvements over those 10 years. You sell the property for $1.5 million. The cost of the sale was $90,000. So, add $500,000, $15,000, $200,000 and the $90,000 for a total $805,000. Subtracting $805,000 from $1.5 million means a gain of $695,000.<\/p>\n

If you are married, filing jointly, the capital gains exemption is $500,000. That means the seller pays capital gains tax on $195,000. A single home seller gets a $250,000 exemption. In that case, they would pay a capital gains tax on $445,000. More or less, your tax is calculated at 20% of the gain, so that\u2019s $39,000 in taxes for the married couple and $89,000 for the single seller. Be sure to check with your tax adviser to estimate the capital gains tax for your home.<\/p>\n

I\u2019ll note that property owners must own their primary residence for at least two years to qualify for the exemption.<\/p>\n

\n<\/div>\n

This tax law also provides no adjustments for inflation or the cost of living.<\/p>\n

In 1997, the year enacted, the national median home price was $129,000. Today, it\u2019s $419,300 according to the National Association of Realtors. That\u2019s an increase of $290,000 or 225%. Inflation and the cost of living have soared since then. California\u2019s median home price was $185,010 in May 1997 compared with $930,260 in May 2026.<\/p>\n

There are four pending Congressional bills that would change the capital gains tax law.<\/p>\n

Introduced June 1, 2026, the \u201cNest Egg Protection Act,\u201d (H.R. 9064) authored by U.S. Rep. Nicole Malliotakis (R-New York) proposes raising the capital gains tax exclusion to $1 million for individuals and couples 65 or older who sell their homes from 2027 through 2030. The home must have been owned by the seller for at least 25 years.<\/p>\n

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Originally introduced Sept. 28, 2022, and reintroduced three times, \u201cMore Homes on the Market Act\u201d (H.R. 1340) would increase the capital gains exemption to $1 million from $500,000 for married couples filing joint tax returns, and $500,000 from $250,000 for single filers.\u00a0The bill\u2019s co-authors, Rep. Jimmy Panetta (D-California) and Rep. Mike Kelly (R-Pennsylvania) also added a provision to adjust for future inflation.<\/p>\n

The \u201cAmerican Dream Act\u201d introduced Jan. 14, 2026 with no bill number proposes to eliminate capital gains taxes on home sales up to $500,000, if the seller is 65 or older and the buyer is a first-time home buyer. The bill would apply to rental and vacation properties in addition to primary residences.<\/p>\n

The \u201cNo Tax on Home Sales Act,\u201d (H.R. 4327) \u2014 originally introduced July 12, 2025 and reintroduced \u2014 proposes to eliminate capital gains tax on primary residence home sales. The bill was introduced by former U.S. Rep. Marjorie Taylor Green (R-Georgia).<\/p>\n

With so much Congressional energy on this, one would think something should pass.<\/p>\n

But what about opposition to capital gains tax relief for home sales?<\/p>\n

The Yale Budget Lab suggests 85-90% of households already fall below current exclusion thresholds. Expanding these tax exemptions disproportionately benefits older, higher-income households in expensive markets, having a minimal affect on unlocking general housing.<\/p>\n

In Southern California and all of California, one of the nation\u2019s most expensive housing markets, any type of additional home sale capital gains relief would go a long way to grease the wheels for would-be home sellers. That, in turn, would bring tremendous buyer opportunities.<\/p>\n

Freddie Mac rate news<\/h4>\n

The 30-year fixed rate averaged 6.47%, 5 basis points lower than last week. The 15-year fixed rate averaged 5.81%, 3 basis points lower than last week.<\/p>\n

The Mortgage Bankers Association reported a 3.8% mortgage application decrease compared with one week ago.<\/p>\n

Bottom line: Assuming a borrower gets an average 30-year fixed rate on a conforming $832,750 loan, last year\u2019s payment was $187 more than this week\u2019s payment of $5,247.<\/p>\n

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.625 %, a 15-year conventional at 5.5%, a 30-year conventional at 6.125%, a 15-year conventional high balance at 5.75% ($832,751 to $1,249,125 in LA and OC and $832,751 to $1,104,000 in San Diego), a 30-year high balance conventional at 6.375% and a jumbo 30-year-fixed at 6.125%.<\/p>\n

Eye-catcher loan program of the week: A 30-year mortgage, 30% down, 5.375% for the first five years payments, and 1 point cost.<\/p>\n

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com.<\/em><\/p>\n

Read more JD Vance slams Israeli officials who criticized Iran deal, deepening rift between allies<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The \u201clock-in\u201d effect has discouraged a lot of Californians from selling their homes, preventing more opportunities for first-time and move-up buyers.<\/p>\n","protected":false},"author":1,"featured_media":16066,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,42],"tags":[],"class_list":["post-16067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion-columnist","category-represents-the-opinion-of-the-author-who-is-either-a-paid-columnist-or-an-unpaid-guest-columnist"],"yoast_head":"\nLawmakers push for higher capital gains exemptions, with an eye on home sales - Silicon Valley Moving Post<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/siliconvalleymovingpost.com\/?p=16067\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lawmakers push for higher capital gains exemptions, with an eye on home sales - 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