President Donald Trump said Tuesday he is considering eliminating capital gains taxes on home sales, a move that could deliver significant financial relief to sellers and potentially reshape the U.S. housing market.
“We are thinking about no tax on capital gains on houses,” Trump said on July 22 during an Oval Office meeting with Philippines President Ferdinand Marcos Jr.
Trump’s remark comes on the heels of signing a sweeping tax bill earlier this month that expanded his 2017 tax reforms. That law includes new tax breaks on tipped wages, overtime pay, and car loans, while also lifting the debt ceiling and reducing Medicaid funding. Now, the former president is setting his sights on housing.
What the proposal could mean for homeowners
Currently, the IRS allows individual filers to exclude up to $250,000 in capital gains from the sale of a primary residence, or $500,000 for married couples filing jointly — amounts that have remained unchanged since 1997.
Trump’s new pitch would eliminate the capital gains tax entirely for home sales, removing any upper limit. That could result in massive tax savings for sellers in markets where home values have surged, especially in high-demand states.
Trump pressures the Fed as part of housing strategy
The capital gains announcement also appears tied to Trump’s ongoing push to stimulate housing activity. During the same Oval Office remarks, he lashed out at Federal Reserve Chair Jerome Powell for keeping interest rates high.
“People aren’t able to buy a house because this guy is a numbskull. He keeps the rates too high,” Trump said, suggesting Powell was acting out of political motives.
Trump has long argued that the Fed’s rate policies are stifling growth and keeping potential buyers sidelined. “The housing market could be unleashed just by lowering the interest rates,” he said.
Backed by Congresswoman Greene
Trump’s tax proposal is aligned with legislation recently introduced by Rep. Marjorie Taylor Greene (R-GA). Her bill would abolish capital gains taxes on home sales entirely.
“The capital gains tax on home sales is an outdated, unfair burden,” Greene said in a statement. “My bill fixes that.”
Critics argue the policy would overwhelmingly benefit wealthier homeowners and could further inflate housing prices by encouraging speculative selling.
Can Trump make it happen?
While Trump can propose such a policy, any changes to the capital gains tax code would require congressional approval. That could be a steep challenge in a politically divided Washington.
According to the Congressional Budget Office, the tax overhaul passed earlier this month is already projected to increase the national debt by $3.4 trillion over 10 years. Adding another tax cut — particularly one this large — would likely face strong opposition from fiscal conservatives and budget hawks.
Broader economic backdrop
The debate comes at a time of heightened economic uncertainty. In April, Fed Chair Powell warned that Trump’s tariffs could drive up inflation, saying:
“Unemployment is likely to go up as the economy slows… and inflation is likely to go up as tariffs find their way and some part of those tariffs come to be paid by the public.”
With inflation still lingering and mortgage rates elevated, Trump’s proposal adds another layer of complexity to the housing outlook heading into the second half of 2025.
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