What If Capital Gains Taxes Went Away?

One of the biggest reasons long-time homeowners tell me they are hesitant to sell is capital gains taxes. 

And honestly, I get it. 

If you bought your home decades ago, especially here in coastal Orange County, your equity may be incredible. But that can also mean the thought of selling comes with a big question: 

"How much am I going to owe?"
 

Right now, homeowners who qualify can generally exclude up to $250,000 in capital gains if they're single or $500,000 if they're married filing jointly when selling their primary residence. To qualify, you generally must have owned and lived in the home as your primary residence for at least two of the last five years before the sale.

The problem is that those exclusion amounts haven't changed in decades, while home values in places like South Orange County have skyrocketed. As a result, many long-time homeowners worry they could face a significant tax bill if they sell.

That's why several proposals are now being discussed in Washington.

Some proposals would increase the current exclusion amount. One senior-focused proposal would raise the exclusion for certain homeowners over 65. Another proposal would eliminate federal capital gains taxes on the sale of primary residences altogether. There has also been discussion about indexing gains for inflation, which could reduce the taxable gain for long-time homeowners.

Nothing Has Changed Yet

To be clear, nothing has changed yet. These are proposals, not law.
 

But it's a conversation worth watching, especially if capital gains taxes have been one of the reasons you've stayed in a home that's larger than you need or delayed making your next move.

Every homeowner's situation is different, and any tax decisions should be made with your CPA or tax advisor. But if you've been thinking about downsizing, moving closer to family, or simply putting your equity to work, this could become one of the biggest housing stories to watch.

Your home may have done exactly what it was supposed to do: build wealth.
 

Now the question is whether that wealth can help fund your next chapter.