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There's a real conversation happening in Washington D.C. right now about eliminating capital gains taxes on the sale of real estate, and if you've been sitting on the fence about selling, this is worth paying attention to. The exclusion limits we all work around — $250,000 for single filers, $500,000 for married couples — haven't been touched since 1997, back when the median home price was a fraction of what it is today. That gap has quietly become one of the biggest reasons sellers stay put instead of listing.
Here's the update: the number being discussed isn't the $500,000-to-$1-million-indexed-for-inflation version I've talked about before. It's a flat $1 million exclusion, and it wouldn't just apply to your primary residence — it would apply to rental properties, vacation homes, everything. And the timing lines up with the upcoming midterm elections. All real estate is local, and so is politics. There's talk of this actually moving in the next couple of weeks.
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It's not permanent — this would ride inside the reconciliation bill rather than becoming a lasting change to the tax code, so it would need to be extended or revisited year by year going forward.
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The number is bigger than expected — a flat $1 million exclusion, not the $500K/$620K-indexed figures floating around earlier, and it covers rental and investment property, not just the home you live in.
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It could soften prices, not just add inventory — sellers who know they're protected up to $1 million in gains may be willing to price more competitively just to get the deal done while the opportunity is there.
MY TAKE
I think this could be the real unlock — if it happens — and here's why. I've said before that owners have two reasons to stay put: the capital gains hit, and the golden-handcuffs effect of a sub-3% COVID-era mortgage. If someone's sitting on a rental property or a vacation home or their owner-occupied primary residence with huge appreciation and this passes — even temporarily — then that's the opportunity to cash-out. I don't think that person waits around. I think they sell now, while the window's open, because nobody trusts Washington to keep a temporary tax break around forever. That urgency is exactly what this market has been missing. It could even create some short-term price softening as sellers who are locked into the tax-free number are willing to negotiate more on price just to get the property sold. It still doesn't solve the rate lock-in problem for someone trading into a new mortgage at today's rates, but for anyone holding investment property, a vacation home, or a house they've simply outgrown, this could be the nudge that finally gets them to decide to sell and sell now. I'll be watching this closely over the next few weeks.
Until Next Week,
Ken
P.S. Are you thinking of adding an Additional Dwelling Unit (ADU) to your property? Text or email me and I'll send you the Special Report I've created that will tell you everything you need to know to get started, Ken@KenHallProperties.com or 951-760-3833.
P.P.S. If you're looking to sell your home in the near future, my book, 'SELLING SECRETS YOU CAN'T AFFORD TO MISS' needs to be in your hands. I can promise you it will add thousands of dollars to your bank account when selling your home if you follow the advice in the book. You can check it out here ... www.KensSellingSecrets.com.
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