Houses are already insanely expensive - this will only add fuel to the fire, and will likely give us the 2008 housing collapse all over again. Moreover, at CRE interest rates beginning to inch back up at 6+%, I think the only ones who benefit will be, surprise surprise, real estate moguls.

The proposal, at least as described in the article, is an elimination of federal gains taxes on the sale of primary residences.

Regardless of your intent going in, if you aren't living in the house when you sell it, you pay capital gains. Under existing law, you have to have been living there 2 years. The article didn't mention whether the duration requirement would be eliminated, and neither did a separate announcement I reviewed.

This isn't about houses - generally. Or about whether you are living in a house when you buy it. It is about the place you are living when you sell it.

for no capital gains taxes is being missed by some.

Particularly corporate buyers acquiring en masse

It would potentially place more high end inventory on the market.

But it’s important to understand that those who benefit by the change are high-earning senior knowledge workers, professionals, many C-suite executives, and those mansion-and-yacht owning capitalists laughing all the way to the bank. It’s not the vast working class that will see any (positive) impact. What’s in this Administration for them?

Sellers subject to the tax may have more incentive to sell. Corporate buyers (and all buyers) would have more top market homes to choose from, thereby potentially decreasing the sales price and increasing the number of closings. The corporate buyer would still have to pay capital gains taxes up the line when they sell as they won’t, I assume, be using the purchased homes as their primary residence. But the “other buyers”, who more likely will use the home as a primary residence, won’t have to pay taxes on the portion of gain with the next sale (over the $250k/500k lifetime exclusion). However, who benefits?

I think the median price of a home in the US is now around $450k. Those substantially above the median will have less taxes to pay, but, for most owners below the median, there is no impact. Hard to be above the $500k exclusion when the sale price of the house is under $250k. So, once again, Repubs propose to give money to the already-well-off while leaving the rest of us holding the bag in the form of declines in quality and availability of services and scope of governance.

Another instance of Republican class theft from the don’t-have-much to the already-have-plenty — i.e., from struggling workers and lower level managers, to professionals and mansion-and-yacht-owning capitalists.

a lot of women get the family home in a divorce. in most cities, $500k doesnt buy much.

and u r completely wrong about who this benefits. when u talk about averages, it’s not actually helpful.
u cant buy anything in good condition in a big city for $250k, and that’s where the decent jobs r.
and it’s 1 time. most ppl in spendy houses didnt start there. they traded up a couple of times.

when we bought our home, my then hubs was not making a lot of money. 1 reason it has gained so much value is that we bought in a very diverse hood when that was not a cool thing to do.
that, and making many improvements over the yrs makes it worth twice what it wd b untouched. a lot of that was sweat. for about half the big improvements, we had to refi. we’ve put more into it than we paid for it. our family grew and the house had to stretch. not an uncommon story. no speculation, no maneuvering.

very few of the ppl who live on my block ever made big money. there’s a couple college profs, a former construction manager, but that’s about as high as it goes. most bought long ago, their homes r paid off, and they r counting on selling the big house they raised the kids in for their retirements.

and i dont think the big house munchers will end up w the homes around here. they grab up the bargains. the ugly houses, the foreclosures. if they’re looking for mcmansions, those arent here, either. no bnb’s even. just a working class hood, w good solid but mostly pretty humble homes.
but the going rate these days is getting into the $550-600k range. for a widow who’s lived her for 20-30 yrs, that will b a hit.

and again, b4 clinton, once in your life, you cd sell your primary residence and pay NO capital gain.
it was good policy. it benefited retirees, seniors who worked hard and played by the rules, and widows/divorcées. ppl who were the backbone of middle class neighborhoods.

That means half of all homeowners live in something worth that or less than that.

The average is $512.8k.

What does it mean when the average is 25% higher than the median? It means there are outliers valued much higher than the median skewing the average higher. As in, say, $10m homes in San Francisco and New York. That means the average home below the median skews even less than the median implies.

While it does cost a lot more than the median to live in or near a great urban center, why is it right that those who can’t afford to do the same must subsidize those that can?

I understand that you bought low, invested in upkeep and updates, and won the lottery by being in the right place to win value via changing demographics and social norms. But, again, is it right that those who are not so lucky must subsidize those that are? (Do you not believe in the morality of progressive taxation?)

Joint filers do not pay taxes on gains until they exceed $500k, and then only on the amount exceeding $500k. The lucky couple is above the median anyway, so already essentially less than half of us.

Single filers pay taxes on gains above $250k. This could still be a home valued less than median. I suppose someone could have bought their home for $1 and now sell for, say, $411k, a pretty decent gain of $410k on their $1. $260k would be exposed to taxes. The tax would be $52k. A serious chunk of change on this highly unlikely scenario.

To still be amongst the unwashed masses, the sales price cannot exceed $410k. If the house was purchased for $150k way back when, then taxes would amount to $2k, an effective tax of just 0.7%. For those selling at or below the median, few if any will benefit from Trump’s EO, and the minuscule few will hardly benefit significantly.

Now if I bought a mansion in Palm Beach for $10 million 20 years ago and sold it for $30 million today, the tax savings for me is a big chunk of change; I’d save $3.9 million, just under 20% (after factoring in the $500k already not taxed), thanks to Trump’s generosity.

So the EO, like all things Trump, is regressive. It benefits the already-have by taking away some tax revenue that could instead go to something with wider social benefit. It’s called a “tax expenditure”, tax dollars not collected and instead going to the P&L or personal savings of those well above the means of most of us. Tax law is loaded with these expenditures. It’s why most of us can’t have nice things.

Note I didn’t factor in the time value of money, which the existing $500k/250k break is supposed to cover. Arguably, the latter doesn’t work well. I’d rather see COLA on the original purchase price (plus adjustments), then see the difference 100% subject to capital gains tax.

(PS/ I live in a home that’s valued above the median, but my point stands as-is regardless of my personal circumstances.)

(PPS/ I’m guessing we’ll just have to agree to disagree.)

i’ve owned my home for 38 yrs. made tons of improvements that i never kept track of. it’s now worth 10 times what i paid for it. if i sold, almost 39% of that money wd go to the irs. if i’d kept careful track, i’d cut that in half.
this will help homebuyers, cuz i’d need to hold out for absolute top dollar to walk away w much. my plan is to stay here til i die, and let my heirs worry about it. but honestly, i shd sell. the place is way to big for just me.

i cant believe i’m ageeing w empty greene. but she’s right on this.

If you sold the house, the first $250-500k are tax-free depending on if you're single/married.

After that, capital gains kicks in, and only the amounts above $500k will even see 20%

but i’m single, and the house is worth about $1m.

Last edited Sat Aug 2, 2025, 07:24 PM - Edit history (1)

The tax law steps up the value of your estate for your heirs, which includes your home. It’s one of those tax expenditures I mention in my last post to you. Not commenting on whether it’s good or bad, but that’s my understanding on this matter.

A lot of the difficulty for new home buyers is that older generations are sitting on homes due to capital gains implications.

I don’t think it will free up much except maybe mansions and McMansions.

In any popular state is north of $550k today. Homes are coming down now but the capital gains part has me tripped up.

In your example there is a capital gain of $300,000.

Before Trump's EO, this is what would be paid on a $550k home in federal capital gains tax:

> Married filing jointly: $0 (the $300k gain is under the $500k exemption)
> Single: $10,000, for an effective tax rate of 3.3% (20% on the $50k above the $250k exemption)

After Trump's EO, both pay zero.

If the sales price was 100x the median, or $41m, and the original price paid was $1m, the gain of $40m would exceed $500k by $39.5m and the tax would be $7.9m (doing married, filing jointly -- you can do the math for single filers). Mr. and Mrs. Big Bucks come out quite well, unlike those below, at, or maybe only a few multiples of the median. Trump's EO greatly benefits those at the top.

The EO, just like everything else about Trump, is regressive. It helps the Already-Haves while not greatly nor directly impacting the majority of us. I suppose IF the taxes continued unchanged, the tax collected could be put to use on things of wider social benefit, but apparently that's not what America wants.

Meanwhile they're still taxing social security benefits. And no help for those with student loans. The Corporation for Public Broadcasting shut there doors yesterday. How many rural hospitals are closing? Capital gain taxes on RE sales could be put to some better use other than padding the bank accounts of the wealthy and the very well off.

See my post #19 for more on my thinking about this.

accelerate for a long time now. Speculation and manipulation carry a lot of the blame along with poor government policy. NIMBYism is allowed to run rampant along with gentrification.

The first $250k-500k of a primary home sale is already tax free.

The people who will benefit from this are those whose houses make more than that. That means millionaires/billionaires who sell their mansions will get the biggest tax breaks.

We could raise it above $250-500k, which is fair considering home price increases. Still, we should keep a cap so billionaires don't get a big tax cut on mansion sales.

my house is worth 10x what i paid for it 38 yrs ago, both w inflation and improvements i didnt keep track of. i’m single. i’d take a big hit.
u cant buy a sf home in most neighborhoods in chgo for $500k.

Perhaps index it to the cost of housing or something.

I think they started out as $200k/100k, but I’m not certain of that.

More and more wealthy people would buy up properties, convert them to short-term rentals (like Airbnbs) and take accelerated bonus depreciation on them, allowing them to report big losses that offset taxable income in the early years; then they sell their existing home, using the exclusion mentioned here to wipe out most of the taxable gains, then move into the rental home and use that as their primary residence. They buy another property to turn into a short-term rental, following the same process as before. Once their new primary residence/old short-term rental qualifies for the exclusion mentioned here, they sell it and rinse and repeat. The bonus depreciation taken on the short-term rental that you would normally have to pay back in terms of taxable gain when you sell the property will then be mostly eaten up by the exclusion mentioned here.

In short, people with the means to do so will own more homes than they otherwise would -- thus reducing supply even further -- and when they do sell those properties, they won't have to pay much (if any) tax on the gains -- thus making the rich even richer and exacerbating income inequality.

This absolute is yet another gift to the wealthier among us and absolutely will not help the housing market issues we are currently experiencing.

i believe the current law is once in a lifetime. or it used to b.

Although I think the $500k/250k is cumulative over a lifetime. At least it used to be.