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Older sellers could shield $1 million in home-sale gains
Older homeowners with big gains could face a smaller federal tax bill if Rep. Nicole Malliotakis’ proposal becomes law, giving qualifying seniors a bigger break on the sale of a longtime home from 2027 through 2030.
Older homeowners who have spent decades in the same house could face a much smaller federal tax bill if a House bill becomes law. In Congress, New York Republican Rep. Nicole Malliotakis has introduced a proposal to temporarily raise the capital-gains exclusion for a qualifying senior who sells a principal residence during taxable years 2027 through 2030, or for sales after Dec. 31, 2026, and before Jan. 1, 2031.
For an unmarried seller who qualifies, the exclusion would rise from $250,000 to $1,000,000. For married couples filing jointly, if either spouse is a qualifying senior, the bill would replace the current $500,000 exclusion with $1,000,000. Capital gains exclusion is the part of tax law that lets homeowners keep a slice of the profit from a sale out of taxable income.
A longer hold on the same house
The bill draws a tight circle around who can use the break. A qualifying senior would have to be at least 65 years old on the date of the sale. The home would also have to be a principal residence that the taxpayer, or either spouse on a joint return, has owned for at least 25 years.
That matters for people whose homes have climbed far beyond what the current exclusion can cover. The proposal is aimed at older homeowners with long-held properties and large paper gains, the ones most likely to run into today’s cap when they sell in an expensive market or after years of appreciation.
A temporary window, not a rewrite
The change would amend Section 121(b) of the Internal Revenue Code, but only for a limited period. The higher exclusion would apply to taxable years beginning after Dec. 31, 2026, which means the relief would cover sales in 2027, 2028, 2029 and 2030.
For seniors weighing whether to downsize, relocate or cash out equity, the practical effect would be straightforward: less of the gain from a longtime home sale would be exposed to federal tax. After that four-year window closes, the current rules would be back in place unless Congress acts again.