How Trump’s No Tax on Home Sales Proposal Affects Homeowners and Buyers

President Donald Trump recently proposed eliminating capital gains taxes on home sales—a bold policy shift that could fundamentally change how millions of Americans approach selling their homes. If enacted, it would be one of the most impactful housing-related tax reforms in decades, offering the potential to unlock billions in sidelined equity and shake loose a frozen housing market.

While the idea isn’t entirely new, it’s gaining serious traction as affordability challenges worsen and tax policy becomes a flashpoint heading into the 2026 election cycle.

The conversation was reignited after Rep. Marjorie Taylor Greene introduced the "No Tax on Home Sales Act," a bill that would remove federal capital gains taxes on primary residences altogether. Greene has actively promoted the plan in the media, including appearances on CNBC and other national outlets, arguing that Americans shouldn't be penalized for building equity through homeownership. Her efforts helped elevate the issue beyond the Capitol and into the national conversation.

Trump’s public support of the concept turned it from a long-shot proposal into a serious political possibility—and one that could have wide-reaching implications for homeowners, housing inventory, and the broader real estate economy.

So the question is no longer whether capital gains taxes on home sales are an obscure issue. The question is whether it’s time to update the system—and what it would mean for the future of the housing market.

Why Now? Because Homeowners Aren't Interested In Selling

Today’s homeowners aren’t just facing one challenge—they’re staring down a perfect storm. Mortgage rates have more than doubled since 2021, making any move a costly one. For many who bought before the pandemic, their current 3% mortgage is a financial asset they’re not willing to give up. Trading that for a 6.5% loan on a smaller or comparable home just doesn’t add up.

But that’s not the only hurdle. The dramatic run-up in home values during the pandemic means that long-time owners are now sitting on massive unrealized gains. If they decide to sell, many will exceed the outdated capital gains exclusion thresholds—and could owe tens of thousands in taxes, even if they’re not wealthy.

Combine that with tight inventory—especially in places like New Jersey, Connecticut, and Southern California—and you’ve got a market where few want to sell, fewer can afford to buy, and prices keep climbing. The end result is a housing logjam: a lack of move-up options, stalled downsizing plans, and no incentive to list. Removing capital gains taxes could change that equation and free up badly needed supply.

Capital Gains Tax: The Hidden Cost Of Selling After a Decade of Home Ownership 

Under current law, homeowners can exclude up to $250,000 in gains if single or $500,000 if married filing jointly, provided they meet the two-out-of-five-year residency rule. But those exclusion limits haven’t changed since 1997—and in that time, home prices have more than tripled in many areas. As a result, more middle-class homeowners are hitting the cap and facing five- or six-figure tax bills when they sell.

Here’s a simple example:

• A married couple bought a home in 2017 for $300,000

• In 2025, they sell it for $1,000,000

• That’s a $700,000 gain

• They qualify for the $500,000 exclusion

• That leaves $200,000 in taxable gains

• At a 15% tax rate, they owe $30,000 in capital gains taxes

That’s $30,000  for the IRS just to sell your house—despite doing everything right by investing in homeownership and staying put for over a decade. And the issue gets worse if the homeowner is single. Using the same example:

• A single filer only qualifies for a $250,000 exclusion

• That leaves $450,000 in taxable gains

• At a 15% tax rate, they’d owe $67,500 in capital gains taxes

For many solo homeowners, that kind of tax bill is enough to delay or derail selling entirely.

How the No Tax On Home Sales Proposal Gained Political Traction

Trump’s comments followed the introduction of the “No Tax on Home Sales Act,” sponsored by Rep. Marjorie Taylor Greene. The bill would eliminate capital gains taxes on the sale of primary residences entirely. Greene has championed the bill publicly, appearing on outlets like CNBC to push the idea that homeowners shouldn’t be punished for building equity.

While the average benefit would be significant—around $100,000 per qualifying seller, according to Yale’s Budget Lab—most of the savings would go to wealthier and longer-term homeowners.

Still, it won't just be the wealthiest homeowners who benefit. Nearly 29 million homeowners—roughly a third of the U.S. market—could already exceed the current exclusion thresholds. The real windfall would come in high-growth metropolitan areas where prices have surged in recent years. Cities like Austin, Miami, Nashville, and Dallas have seen enormous appreciation, pricing more homeowners above the exclusion cap.

According to Zillow, the U.S. hit a record 550 “million-dollar cities” in 2024—markets where the typical home is valued at $1 million or more. While California, New York, and New Jersey dominate the list, it’s the Sun Belt markets that have seen the most dramatic growth in recent years.

In those cities, eliminating capital gains taxes could unfreeze inventory and give homeowners confidence to list—without worrying about losing a third of their appreciation to the IRS. And with inventory frozen and affordability under pressure, proponents argue this kind of tax relief could free up listings and improve market conditions.

What It Would Mean for the Housing Market

Removing capital gains taxes on primary residence sales would come with ripple effects across nearly every corner of the housing market. Supporters argue it could be a much-needed catalyst to unlock inventory, especially in areas where homeowners feel financially stuck. But critics warn it could disproportionately benefit the wealthy while blowing a hole in government revenue.

Here’s a breakdown of the potential pros and cons:

Potential Benefits:

• Incentivize long-term owners to sell

• Free up more inventory, especially in high-cost markets

• Relieve pressure on middle-class sellers in appreciating areas

• Make downsizing and relocation more financially viable

• Help normalize home prices by increasing available listings

Potential Drawbacks:

• Reduce federal tax revenue by billions of dollars cause government deficit to surge even higher

• Primarily benefit wealthier or long-term homeowners with large equity gains

• Widen the wealth gap between homeowners and renters

• Risk adding volatility to the housing market if too many sellers flood the market at once

• Could weaken support for future housing subsidies or tax credits due to lost revenue

But it would also reduce federal tax revenue and primarily benefit those with large unrealized gains. Critics argue that the move could widen the wealth gap and remove a key source of funding for government programs.

Looking Ahead: Will this Proposal Become Law

Whether this proposal becomes law remains to be seen. But it reflects growing political momentum to update housing-related tax policy—especially as more Americans feel locked into homes they’d otherwise sell. For now, homeowners with major gains should speak with a tax advisor and mortgage professional before listing. Even without reform, there may be strategies to reduce or defer capital gains exposure while making the next move financially sound.