Trump Floats Ending Capital Gains Tax on Home Sales: Who Would Actually Benefit

President Trump said on July 22, 2025, that his administration is considering eliminating capital gains taxes on home sales. Asked about the idea in the Oval Office, he said "we are thinking about no tax on capital gains on houses," while suggesting lower interest rates could make the step unnecessary, Bloomberg reported. No formal proposal accompanied the remarks, but the idea would matter most to long-time owners of expensive homes.

How the tax works today

A homeowner who sells a main home may exclude up to $250,000 of gain, or $500,000 on a joint return, if the owner has owned and lived in the home for at least two of the five years before the sale, according to IRS Topic 701. Gain above the exclusion is taxed at long-term capital gains rates of 0%, 15% or 20%, and it can also trigger the 3.8% net investment income tax, as CNBC noted. The portion that is excluded is not subject to that 3.8% tax, per the IRS.

The exclusion amounts date to 1997 and have never been indexed for inflation. Since then, the median US home sale price has risen nearly 190%, from about $145,000 to about $417,000 as of the first quarter of 2025, according to Federal Reserve data cited by CNBC. Rep. Marjorie Taylor Greene (R-Ga.) introduced the No Tax on Home Sales Act, which would end the tax on primary home sales, about two weeks before the president's comments.

Who would benefit

Because the exclusion already covers most sellers, repeal would help only those with gains above it. The Budget Lab at Yale found that about 10% of homeowner households in 2022 had primary-residence gains above the exclusion; the National Association of Realtors estimates the share at 15% after recent price growth. Those households had average net worth of $5.7 million, compared with just over $1 million for homeowners below the threshold. Their homes averaged about $1.4 million in value with roughly $430,000 of taxable gain, and repeal would save them about $100,000 on average at a 23.8% rate.

A 2025 NAR study cited by CNBC estimated that 29 million homeowners, or 34%, could have gains above $250,000, and 8 million, or 10%, gains above $500,000. Owners in Washington, California, Utah and Massachusetts are more likely to exceed the limits.

The after-tax math

Example: a married couple bought their home in 1998 for $400,000, added $100,000 of capital improvements, and sells in 2025 for $2 million. Their adjusted basis is $500,000, so their gain is $1.5 million.

The example assumes the couple is in the 20% capital gains bracket and owes the 3.8% tax on the full taxable gain. State income tax, where it applies, would add to the current-law bill.

Moves to discuss with your advisor

Nothing has changed in law, and delaying or accelerating a sale on the strength of a comment carries its own risks. Owners with large embedded gains often keep thorough records of capital improvements, which raise basis and reduce taxable gain, and confirm they meet the two-out-of-five-year ownership and use tests. Those weighing a sale in the next few years may want a CPA to run the numbers under current law rather than assume relief is coming.

What to watch

Any change would require Congress, and cost is an obstacle. The Tax Policy Center's Howard Gleckman told CNBC that lawmakers are more likely to raise the exclusion than to end the tax outright. Watch whether Greene's bill attracts co-sponsors, whether a proposal to index or increase the $250,000 and $500,000 limits emerges instead, and whether the White House puts a formal plan in writing.

After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.