Sponsors
The bill would give broad tax relief and simpler treatment for many home sellers by removing dollar limits on the primary‑residence gain exclusion, at the cost of reduced federal revenue and a disproportionate benefit to wealthier property owners.
Homeowners who sell a primary residence can exclude all capital gain from taxable income (removing the current $250K/$500K limits), meaning many sellers pay little or no federal tax on home-sale gains.
Middle‑class families selling long‑time homes (for downsizing, retirement, relocation) will generally face lower tax bills, making such moves more financially feasible.
The rule removes the need to apply or prorate the old dollar‑limit rules for many common transactions, simplifying tax treatment and recordkeeping for sellers and the IRS.
The federal government will lose tax revenue from excluded gains, which could increase the deficit or require offsetting tax increases or spending cuts affecting taxpayers broadly.
Wealthier homeowners stand to gain the most from uncapped exclusions on expensive properties, reducing overall tax progressivity and shifting benefits away from lower‑wealth households.
Removing dollar limits may prompt disputes or complexity over what qualifies as a primary residence or look‑back rules as taxpayers seek to maximize the exclusion.
Based on analysis of 2 sections of legislative text.
Removes the dollar caps that limit how much capital gain a homeowner can exclude from tax when selling their main home, so qualifying sellers can exclude all eligible gain rather than being limited to the previous $250,000 (single) / $500,000 (married filing jointly) caps. The rule that you must meet the ownership/use test and that the exclusion can be used only once every two years remains in place. The change applies to sales and exchanges after enactment.
Introduced January 16, 2026 by Scott Fitzgerald · Last progress January 16, 2026