Rep. Fitzgerald Introduces the Middle Class Home Tax Elimination Act
WASHINGTON, DC — Congressman Scott Fitzgerald (WI-05) introduced the Middle Class Home Tax Elimination Act, legislation that would eliminate capital gains taxes on the sale of primary residences. This bill is designed to help increase housing supply and modernize the tax code to reflect today’s housing market realities by removing outdated limits on the capital gains exclusion that no longer protect typical homeowners.
BACKGROUND: The current exclusion of capital gains on the sale of a principal residence was enacted in 1997, with dollar limits of $250,000 for single taxpayers and $500,000 for married couples filing jointly. At the time, these limits were considered sufficiently high. Only a small fraction of home sales were expected to generate taxable gains. However, the exclusion amounts were not indexed for inflation or home price growth.
As a result, sustained increases in housing prices over the past two decades have significantly eroded the real value of the exclusion. Home prices have risen substantially since 1997, particularly in high-cost and rapidly growing regions. Many homeowners, especially long-term owners, now face substantial capital gains tax liability despite selling homes that are modest by local market standards. Single filers are disproportionately affected due to the lower exclusion cap, even though widowed or divorced taxpayers may have accumulated gains during periods of joint ownership. These outcomes increasingly conflict with the original intent of the exclusion, which was to shield typical homeowners from capital gains tax when selling primary residences.
NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.
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