Congress eliminates $500k cap on home-sale tax breaks for sellers
H.R. 7400 — Making Homeownership Affordable Again Act · Filed by Nancy Mace (R-SC) · 1 cosponsor · Introduced Feb 5, 2026 · Referred to committee
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What it does
This bill eliminates the $250,000 per-person (or $500,000 per-couple) cap on federal income-tax exclusion for gains from selling a primary home, making the exclusion unlimited. It also creates a new tax break allowing homeowners to exclude gains when selling to a first-time homebuyer, even if they don't meet the current requirement of having owned the home for 2 of the last 5 years. The result: homeowners pay no federal income tax on profits from home sales, regardless of size, and can sell to first-time buyers without the usual ownership-duration restriction.
Why we flagged it
The bill's operative mechanism is a targeted federal income-tax exclusion for residential real-estate gains, benefiting homeowners with appreciated property. It is not a broad affordability measure (renters and first-time buyers see no direct benefit) but a tax preference for a specific asset class and ownership cohort.
What the text implies
- Unlimited gain exclusion may incentivize rapid home-price appreciation and speculative investment in residential real estate, potentially exacerbating housing affordability for non-owners by reducing supply and inflating prices.
- Foregone federal revenue from unlimited exclusions could reach billions annually, creating pressure to offset via other tax increases, spending cuts, or deficit expansion — the distributional impact depends on Congress's response.
The full analysis lists 4 implications of this text.
Who stands to gain
homeowners with high-value properties; real-estate investors and flippers; residential real-estate market participants