How Proposed Changes Could Impact Home Sales

Lisa Mailhot  |  May 22, 2024

Sellers

How Proposed Changes Could Impact Home Sales

 

With home values soaring, many homeowners face significant capital gains taxes upon selling their homes. Current tax laws can deter homeowners from selling, contributing to a static housing market. This  delves into how proposed changes to these laws aim to encourage more homeowners to sell, potentially revitalizing the market.

The Burden of Rising Home Values

Impact of Increased Home Values on Taxes

Over the past few decades, the threshold for capital gains tax exemptions on home sales has remained unchanged, despite significant appreciation in home values. A report from CoreLogic highlights a sharp increase in homes selling with profits exceeding the $500,000 exemption limit, leading to hefty tax liabilities for many sellers.

Legislative Efforts to Stimulate the Market

The More Homes on the Market Act

In response to these challenges, the More Homes on the Market Act, proposed by U.S. Rep. Jimmy Panetta, seeks to double the capital gains exemption limits and index these to inflation. This change could significantly decrease the number of transactions subject to capital gains taxes, encouraging more homeowners to enter the market.

Evaluating the Proposed Changes

Benefits and Potential Drawbacks

By raising the exemption limits, the proposed bill could ease the tax burdens on homeowners, particularly older individuals looking to downsize. However, these changes could also lead to potential revenue losses for the government, which may impact public services and infrastructure funding. This addition provides a balanced view of the potential impacts of the legislation.

 

The State of the Market

Current Trends and Future Projections

Despite the apparent benefits, the bill's progression through Congress remains uncertain. Meanwhile, states like California continue to see a high percentage of home sales subject to capital gains taxes, underscoring the pressing need for tax reform in high-cost living areas.

Bottomline

The evolving landscape of home values and taxation presents both challenges and opportunities for homeowners. By adjusting to these changes and advocating for sensible tax reforms, we can foster a more dynamic and accessible housing market. If you're considering moving to Orange County and need guidance navigating these complexities, let's connect.

 

 

Reference: Griffith, Keith. "Capital Gains Taxes Box Homesellers Into a Corner—These States Are the Hardest Hit." Date: May 22, 2024.

RECENT BLOG POSTS

Why Tiny Home Prices Are About to Surge—And What It Means for Orange County Buyers

New tariffs on Chinese imports are already causing sharp increases in tiny home and ADU prices. In high-cost regions like Orange County, this could significantly impac… Read more

The Hidden Risk in Buyer Love Letters (And How to Avoid It)

Buyer love letters might tug at heartstrings, but they can also tread dangerous legal ground. Learn the top three ways these letters could violate Fair Housing laws — … Read more

When Repairs Go Wrong: Can You Legally Withhold Rent in California?

Renters have more power than they think when it comes to repair issues in California. This blog breaks down your rights as a tenant, including when and how you can leg… Read more

Midwest Home Prices Surge Fastest in the Nation

The Midwest is on fire—and we’re not talking weather. Home prices in cities like Milwaukee and Detroit are soaring due to tight inventory and high demand. This blog di… Read more

Why Buyers Need Over $52K More Than Renters—and the Gap’s Growing

The income gap between renting and owning a home has surged to over $52,000 in 2025. While rent increases have slowed, home prices and mortgage rates remain high, maki… Read more

Gas Prices Drop, Inflation Slows—Here’s What That Could Mean for Your Mortgage

Inflation cooled in March thanks to falling gas prices, providing a temporary sigh of relief for mortgage markets. While rates aren't dropping just yet, lower pressure… Read more

Why Homebuyers Are Turning to Stocks for Their Down Payments

A new Redfin survey reveals that 1 in 5 homebuyers plan to sell stocks to fund their down payment. As market volatility shakes confidence, homeowners and renters alike… Read more

Why Strong Jobs Aren’t Sparking a Housing Comeback

Despite a strong March jobs report, new tariffs and rising economic uncertainty are casting a shadow over the housing market. Here’s how these national trends could pl… Read more

New MLS Rules Let Sellers Choose How to List

The National Association of Realtors® just introduced a new companion to its Clear Cooperation Policy: Multiple Listing Options for Sellers. This update offers sellers… Read more

We are excited to assist you in finding your perfect home

Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most