Sponsors (2)
The bill makes selling a primary home largely tax-free and simplifies filing for many sellers, but it reduces federal revenue and disproportionately benefits higher-income sellers, creating distributional and enforcement trade-offs.
Homeowners who sell their primary residence can exclude all capital gain from taxable income because the previous $250K/$500K dollar caps are removed.
Homeowners who sell to first-time homebuyers (buyers with no ownership in prior 3 years) can qualify for the exclusion, expanding eligibility for sellers in such transactions.
Taxpayers may have simpler tax planning and reporting because broadening the exclusion removes the need to prorate or track partial exclusions tied to dollar caps.
Taxpayers in general face higher federal revenue loss from removing the exclusion caps, which could increase pressure for higher taxes or reduced public services.
High-income sellers benefit disproportionately by being able to exclude very large gains, reducing the progressivity of the tax system.
The expansion of qualifying transfers to include certain sales to first-time homebuyers could be exploited for tax sheltering, complicating IRS enforcement and raising compliance burdens for taxpayers and the agency.
Based on analysis of 2 sections of legislative text.
Removes dollar caps on the exclusion for gain on the sale of a principal residence and allows transfers to defined first-time homebuyers to qualify.
Official title: To amend the Internal Revenue Code of 1986 to exclude all gain from the sale of a principal residence or any residence which is sold to a first-time homebuyer, and for other purposes.
Introduced February 5, 2026 by Nancy Mace · Last progress February 5, 2026
Removes the current dollar caps on the tax exclusion for gain from the sale of a principal residence and expands an existing exception so sales to "first-time homebuyers" can qualify. The change applies to sales and exchanges after the law is enacted, effectively allowing sellers to exclude unlimited gain (subject to other existing rules) and permitting transfers to newly defined first-time buyers to preserve the exclusion in certain circumstances. This is an amendment to the Internal Revenue Code's rule that governs how much profit a homeowner can exclude from taxable income when selling their main home. It also updates cross-references and the definition of qualifying transfers so more transactions can meet the exclusion conditions.