More Homes on the Market Act
- Sponsor
- Sen. Cornyn, John [R-TX]
- Committees
- Finance Committee (primary)
- Last action
- Dec 3, 2025
Bottom line
The bill doubles the tax-free profit limit on home sales for most homeowners and indexes it for inflation, aiming to encourage housing turnover and reduce tax burdens.
What it actually does
This bill significantly increases the capital gains exclusion for the sale of a principal residence. It raises the exclusion from $250,000 to $500,000 for single filers and from $500,000 to $1,000,000 for married couples filing jointly. Additionally, it introduces an annual inflation adjustment for these new exclusion amounts, starting in taxable years after 2025.
Proponents argue
Proponents argue that increasing the exclusion encourages homeowners, particularly those with significant equity built over time, to sell their homes without facing substantial capital gains taxes, thereby freeing up housing inventory. They emphasize that current exclusion amounts have not kept pace with home price appreciation, especially in high-cost areas, making this adjustment necessary and fair. Indexing for inflation ensures the benefit retains its value over time.
Opponents contend
Opponents might argue that this tax benefit disproportionately favors wealthier homeowners who have accumulated substantial equity and are more likely to exceed the current exclusion limits. They contend that it does little to address housing affordability for first-time buyers or lower-income individuals, and that the revenue loss could be better used for direct housing assistance programs. Some might also question the effectiveness of this measure in significantly increasing housing supply, suggesting other factors are more influential.
The bill text is very short and easy to read, making it accessible for anyone to understand its core provisions quickly.
Section 2(a) of the bill, amending Section 121(b) of the Internal Revenue Code of 1986.
Doubling and Inflation Adjustment of Capital Gains Exclusion for Principal Residence Sales
This provision amends the tax code to significantly increase the amount of profit a homeowner can exclude from capital gains taxes when selling their primary residence. For single individuals, the exclusion rises from $250,000 to $500,000. For married couples filing jointly, it increases from $500,000 to $1,000,000. These new, higher exclusion amounts will also be adjusted annually for inflation starting in taxable years after 2025, using the cost-of-living adjustment mechanism, with rounding to the next lowest multiple of $100.
Supporters argue
Supporters argue this change modernizes the capital gains exclusion to reflect current housing market values, especially in areas where home prices have soared. They contend it removes a tax disincentive for older homeowners or those looking to downsize or relocate, thereby encouraging more homes to come onto the market. The inflation adjustment ensures the benefit is not eroded over time.
Critics contend
Critics might argue that this provision primarily benefits wealthier homeowners who are more likely to realize gains exceeding the current limits, thus exacerbating wealth inequality. They may also contend that it represents a significant tax cut for a specific demographic without clear evidence that it will substantially alleviate housing supply issues for the broader population, particularly first-time buyers.
Tradeoffs
The bill balances the desire to reduce tax burdens on homeowners and potentially stimulate housing market activity against concerns about revenue loss and whether the benefits are equitably distributed across income levels. There's a tension between providing tax relief for existing homeowners and addressing broader housing affordability challenges.