To amend the Internal Revenue Code of 1986 to eliminate the dollar limitations on the exclusion of gain from sales of principal residences, and for other purposes.
Summary
What This Bill Does
This bill amends section 121 of the Internal Revenue Code, which excludes gain from the sale or exchange of a principal residence. Current law has dollar caps in section 121(b), commonly $250,000 for an individual and $500,000 for certain joint filers. The bill strikes the paragraphs containing the dollar limitations and related special rules, redesignates the remaining paragraphs, and updates reduced-exclusion cross-references in section 121(c). The amendments apply to sales and exchanges after enactment. The practical effect is to remove the federal dollar ceiling on gain that can be excluded when a taxpayer otherwise satisfies the principal-residence rules.
Who Benefits and How
Homeowners in high-cost housing markets benefit because appreciation above the old dollar caps could be excluded from federal taxable income if other section 121 requirements are met. Older homeowners, long-time residents, and families with highly appreciated homes benefit from more flexibility to sell, downsize, relocate, or move for work without a large federal capital-gains tax. Real estate agents and housing markets may benefit if the tax change reduces lock-in for owners with large unrealized gains.
Who Bears the Burden and How
Federal revenue collections bear the cost of excluding larger gains from taxation. Treasury and IRS staff must update forms, instructions, guidance, and audit procedures for section 121. Taxpayers and preparers must still document principal-residence eligibility, ownership and use periods, reduced-exclusion circumstances, and sale timing after enactment. Housing markets may see distributional effects because the largest benefit goes to owners with the highest home appreciation.
Key Provisions
- Amends Internal Revenue Code section 121 to remove dollar caps on principal-residence gain exclusions.
- Repeals the existing capped exclusion paragraphs and redesignates remaining section 121(b) rules.
- Requires reduced-exclusion cross-references in section 121(c) to point to the remaining section 121(b) rule.
- Applies the unlimited exclusion change to sales and exchanges after enactment.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Eliminates the fixed dollar limits on the Internal Revenue Code section 121 exclusion for gain from sales or exchanges of principal residences, applying the unlimited exclusion to sales and exchanges after enactment while retaining remaining eligibility and reduced-exclusion rules.
Key Policy Areas
Tax, Real Estate, Consumers
Primary Purpose
Eliminates the fixed dollar limits on the Internal Revenue Code section 121 exclusion for gain from sales or exchanges of principal residences, applying the unlimited exclusion to sales and exchanges after enactment while retaining remaining eligibility and reduced-exclusion rules.
Policy Domains
Substantive provisions
Identified Gains
- Homeowners in high-cost housing markets
- Older homeowners
- Long-time residents
- Families with appreciated homes
- Real estate agents
- Tax preparers
Identified Costs
- Federal revenue collections
- Treasury tax guidance staff
- IRS forms staff
- Taxpayers documenting section 121 eligibility
Sponsors
Legislative Progress
In CommitteeMr. Goldman of Texas introduced the following bill; which was …
Referred to the House Committee on Ways and Means.
Introduced in House
Bill Structure & Actor Mappings
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