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President Donald Trump is weighing taxes that end capital gains on home sales to strengthen the housing market, so experts say it can lower bills without legislative changes.
When asked about the idea for this week’s Oval Office, Trump told reporters, “We’re thinking about it.”
Under current law, if your profits exceed $250,000 for a single filer, or if you file $500,000 together with a married couple, you can incur a capital gains tax on your major home sales.
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If your home sales profit exceeds $250,000 or $500,000, you will pay 0%, 15%, or 20% capital gains tax, depending on your taxable income. (Calculate taxable income by subtracting most of the standard or itemized deductions from adjusted gross income.)
Some high-income earners also owe the 3.8% extra charge, known as net investment income tax, to profits from home sales that exceed the threshold.
People who pay capital gains taxes on home sales
While home prices have skyrocketed over the past decades, most sellers are below the $250,000 or $500,000 profit threshold, experts say.
“We’re looking forward to seeing you in the future,” said William McBride, Chief Economist at the Tax Foundation.
Approximately 34% of homeowners could be exceeding the $250,000 threshold for a single filer, and a 2025 survey by the National Association of Realtors, advocating capital gains reforms for home sales, could exceed the $500,000 limit that married couples submit jointly.
If you are planning to sell your home and expect profits above the threshold, here are some ways to lower your capital gains tax bill, experts say.
Reduce the “cost base” of your home
According to Catherine Valega, a certified financial planner at Boston-Area, founder of Green Bee Advisory, many home sellers don’t know that they can trim capital gains by increasing the “cost-based” or the original purchase price for their home. She is also a registered agent, a tax license to practice before the IRS.
You can increase your foundation by adding “capital improvements,” such as “improving the resale value of your home,” she said.
Examples of these updates include adding rooms, landscaping, or adding new systems, according to the IRS.
However, capital improvements do not include repeated repairs and maintenance “needed to keep your home in good condition” such as repeated leakage fixes, broken hardware replacements, etc.
Whether the law has changed or not, you must keep a record of capital improvements in your home.
