Monterey, CA – U.S. Representative Jimmy Panetta (CA-19) and Representative Mike Kelly (PA-16) 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. This has had an outsized impact on California homeowners who face some of the highest housing costs in the nation.
“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.”
“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.”
“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.”
“California REALTORS® thank Congressman Panetta for introducing the ‘More Homes on the Market Act.’ This bill will provide necessary tax relief for California homeowners, particularly senior citizens, who have been unable to move because of the tax burden that could result if they were to sell,” said C.A.R. President Jennifer Branchini, a Bay Area real estate agent and REALTOR®.
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.
Below, Press Release from C.A.R.
California REALTORS® applaud bill to raise capital gains exclusion and free up housing inventory
LOS ANGELES (March 1) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) today issued the following statement in response to the “More Homes on the Market Act,” reintroduced today by House Representatives Jimmy Panetta (D-CA) and Mike Kelly (R-PA). The bipartisan bill increases the capital gain exclusion amounts on the sale of a principal residence to $500,000 for single filers and $1 million for joint filers and indexes the exclusion for inflation.
“California REALTORS® thank Congressman Panetta for reintroducing the ‘More Homes on the Market Act.’ This bill will provide necessary tax relief for California homeowners, particularly senior citizens, who have been unable to move because of the tax burden that could result if they were to sell,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®.
“For working Californians, a home is their biggest and most important investment. However, because the capital gains exclusion was passed 25 years ago with no indexing for inflation, fewer and fewer families have been able to downsize and access the equity built up in their homes. This has resulted in fewer homes being available for younger and first-time homebuyers to move into, which has driven up demand and home prices even more.”
The National Association of REALTORS® estimates that in California, as many as 95 percent of single homeowners and 68 percent of married homeowners who purchased their homes before 2000 could face capital gains tax if they sold their home this year.
Leading the way… ® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 220,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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