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By Giulia Carbonaro
Senior Reporter
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Millions of older homeowners could receive a temporary tax break when selling their homes under a new Republican proposal designed to encourage seniors to downsize and free up housing inventory for younger buyers.
Representative Nicole Malliotakis of New York has introduced legislation that would double the capital gains tax exclusion available to qualifying homeowners over 65, allowing some to avoid taxes on up to $1 million in home-sale profits.
Supporters say the measure could help unlock housing inventory at a time when many older Americans remain in homes they might otherwise sell, while critics could question whether the proposal primarily benefits households sitting on substantial housing wealth.
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Malliotakis introduced H.R. 9064, known as the Nest Egg Protection Act, at the end of last month.
Many baby boomers purchased their homes decades ago and have benefited from enormous gains in property values. But selling those homes can trigger significant capital gains taxes once profits exceed current federal exemptions.
Combined with elevated mortgage rates and a persistent shortage of homes for sale, those tax concerns have contributed to what housing economists often describe as a "lock-in effect," discouraging some homeowners from moving even when their housing needs have changed.
What the Bill Would Do
Malliotakis's legislation would temporarily increase the capital gains tax exclusion for homeowners aged 65 and older who sell long-held primary residences between 2027 and 2030.
Currently, homeowners can exclude up to $250,000 in capital gains if filing individually or $500,000 if married and filing jointly, provided the home served as their primary residence for at least two of the previous five years.
Under the proposal, eligible seniors could exclude up to $1 million in gains from taxation.
The expanded exemption would apply only to homeowners who have owned their property for at least 25 years.
"Too many seniors on Staten Island and in Brooklyn who purchased their homes decades ago and built equity over a lifetime are now facing the possibility of a significant capital gains tax bill if they choose to sell or downsize," Malliotakis said in a statement.
"My legislation would expand the capital gains tax exemption to provide meaningful relief and allow seniors to keep more of their hard-earned equity."
Why More Homeowners Are Facing Bigger Tax Bills
The current capital gains exclusion was established under the Taxpayer Relief Act of 1997 and has never been adjusted for inflation.
It allows homeowners to exclude capital tax gains of $500,000 for married couples or $250,000 for single filers when they sell their houses, provided it was their main residence for at least two years out of the five before the sale.
Since the Taxpayer Relief Act was passed, the average sale price of a typical U.S. home has tripled, going from $172,200 in the first quarter of 1997 to $514,600 in the first quarter of 2026, according to data from the Federal Reserve of St. Louis.
As a result, many longtime homeowners now hold far more equity than lawmakers anticipated when the current thresholds were established.
Americans collectively held roughly $34.7 trillion in home equity at the end of 2025, according to Realtor.com.
Baby boomers have benefited more than most. Data from Redfin found that nearly 80 percent of boomers owned their homes in 2025, making them the most homeowner-heavy generation in the country.
While that equity has strengthened household balance sheets, it has also increased the likelihood that homeowners could face taxable gains when selling.
Could the Bill Help the Housing Market?
Under Malliotakis’ proposal, the capital gains tax exclusion for people over 65 will be raised to include profits of up to $1 million, double the current maximum. That would only apply to long-term homeowners who have owned their property for at least 25 years.
Freeing Homes for Younger Generations
One of the bill's primary goals is to increase the supply of homes available for sale.
Housing analysts have long argued that older homeowners often remain in larger homes because moving can trigger both tax costs and higher borrowing expenses.
If more seniors choose to sell, supporters say, larger homes could become available to younger households looking for more space.
"By reducing a major tax barrier to selling, this proposal could encourage more longtime homeowners to rightsize their housing and create opportunities for the next generation of homebuyers," Sandy Krueger, CEO of the Staten Island Board of Realtors, said in comments reported by Realtor.com.
Whether the proposal gains traction remains uncertain.
The legislation has not yet attracted a co-sponsor in the House, and there is no indication of when lawmakers might take it up for consideration.
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