C.A.R. applauds the “More Homes on the Market Act,” introduced recently 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 it indexes the exclusion for inflation.
Because the capital gains exclusion was passed 25 years ago with no indexing for inflation, fewer and fewer families in California have been able to downsize and access the equity built up in their homes. This has particularly affected senior citizens, who have been unable to move because of the onerous tax burden that could result if they were to sell. Consequently, fewer homes are available for younger and first-time homebuyers to move into, and this has further driven up demand and prices for homes. If passed, this new federal legislation will provide the necessary tax relief for California homeowners and lead to more homes on the market.