Home Sale Timing: Tax Law Changes?
Dear Monty: I read your recent column regarding capital gains exemptions. I'm aware that there is a bill in Congress to raise the exemption to $1 million (for joint): H.R. 1321 -- "More Homes on the Market Act." I've asked my congressman for a status update but have received no reply. Do you have any insight? It will affect my timing on selling as it could save tens of thousands in capital gains taxes.
Monty's Answer: Your interest in timing your home sale to potentially benefit from an increased exemption and working to stay ahead of the situation is admirable. That being said, there are some downsides to getting too far ahead. As you've noted, H.R. 1321 proposes to increase the capital gains exclusion for joint filers to $1 million (up from the current $500,000), but like many bills in Congress, its path to becoming law is uncertain. For current information about existing capital gains exclusions and requirements, visit IRS.gov. H.R. 1321 was introduced in Congress early in 2023 and has seen little movement since.
The existing capital gains exclusion allows married couples filing jointly to exclude up to $500,000 of gain from the sale of a primary residence ($250,000 for single filers), provided they have owned and used the home as their primary residence for at least two out of the five years before the sale. While the proposed increase in the exemption amount could result in significant tax savings for some homeowners, several factors should be considered. Here are some reasons you should decide based on current law rather than pending legislation.
No. 1: The timing of any potential passage is uncertain, and there's no guarantee the bill will become law in its current form.
No. 2: Even if passed, the effective date could differ from what's currently proposed, or implementation could be gradual.
No. 3: Delaying a sale while waiting for legislative changes could expose you to market risks, including potential decreases in home values or missed opportunities in a favorable market.
If you're considering delaying your home sale, consider consulting with a qualified tax professional who can analyze your specific situation. They can help you weigh your options and the potential tax benefits against other financial considerations, including current market conditions, personal circumstances and alternative tax strategies available under existing law.
Your proactive approach to contacting your congressman is appropriate for staying informed about the legislation. It may be that your congressman, understanding the reasons stated above, had many higher-priority tasks on his to-do list and has not yet gotten to your request for a status update. You might also consider setting up alerts for H.R. 1321 on Congress.gov to track its progress directly.
Remember that tax savings, while important, shouldn't be the only factor in deciding when to sell your home. Your options may be weighted by today's real estate market, which is under considerable duress with the class action lawsuits, the Federal Reserve holding interest rates high, a new administration that is promising unprecedented changes in how our government functions and the threat of inflation still unsettled.
Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @montgomRM or DearMonty.com.
----
Copyright 2025 Creators Syndicate, Inc.
Comments