H.R. 1340: More Homes on the Market Act

H.R. 1340 would update one of the best-known home-sale tax rules. Right now, many homeowners can exclude up to $250,000 in profit from taxes when selling a primary residence, or up to $500,000 for many married couples filing jointly. This bill would double those limits to $500,000 for single filers and $1,000,000 for married couples.

The core argument behind the bill is simple: home values have risen sharply over time, but the exclusion has not kept pace. That means some longtime homeowners, especially in expensive housing markets, may face a tax hit if they sell. Supporters say that tax concern can discourage people from listing homes, which reduces supply and makes it even harder for younger families and first-time buyers to find homes.

The bill also adds annual inflation indexing starting after 2024, so the new exclusion amounts would rise over time instead of staying frozen for decades. That would make the tax break more responsive to future home-price growth and general inflation. The change would apply to sales and exchanges after the law is enacted, so it would take effect quickly rather than years down the road.

The likely tradeoff is federal revenue. A larger exclusion means more home-sale gains would go untaxed, especially for owners with large appreciation. Critics may argue the biggest benefits would flow to higher-wealth households and owners in high-cost areas, while renters and people who do not have large home equity gains would see little direct help. Whether this actually puts significantly more homes on the market will be the central policy debate as the bill moves forward.