Author Topic: Capital gains exclusion on sale of home -- likely to go away?  (Read 830 times)

Trudie

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I have heard some -- although not a lot -- of discussion that one of the tax reform proposals under consideration would eliminate the capital gains exclusion on the sale of the primary home.  Likely or no?

I would think this would be tremendously unpopular and therefore DOA.  It penalizes the typical homeowner and really throws a wrench into things for those close to retirement.  But then again, I'm not a member of Congress.

And also, it has reminded me that I have not done a good job of keeping receipts on most of the capital expenditures on our almost 14-year-old home.  (Working on it...)  Some of this will be difficult to reconstruct now, but I should be able to track down records for the major stuff -- just in case.  Realistically we don't live in a region where appreciation has been huge and after we deduct selling costs we're looking at capital gains of $25-35K... worst case scenario.

terran

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Re: Capital gains exclusion on sale of home -- likely to go away?
« Reply #1 on: May 16, 2017, 09:15:03 PM »
That would be quite the loss for some people.

We're about to put our home on the market -- what are the chances it effects the 2017 tax year? Or do such changes generally apply to future tax years only?

seattlecyclone

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Re: Capital gains exclusion on sale of home -- likely to go away?
« Reply #2 on: May 17, 2017, 01:56:10 AM »
There are all sorts of things that Congress might do. Let's wait for an actual proposal to be put out there before we worry too much. I personally think such a change is a bit unlikely, but if it does happen it likely won't take effect until the next year. That would make for a lot of busy real estate agents as everyone trades houses with each other to get a free basis reset while they still can.
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mary w

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Re: Capital gains exclusion on sale of home -- likely to go away?
« Reply #3 on: May 19, 2017, 11:04:59 AM »
I would bet any proposal would be DOA because of its widespread popularity.  I'm in my mid-60s and a capital gains exclusion of primary residences has been around in one form or another my entire adult life.  Probably much long, but that's all I remember.

The form has changed over the years.*  IIRC you use to be able avoid capital gains entirely as long as you bought a house for more money (rolled in the gain to the new house).  Then they added a $125K one-time exclusion for seniors who bought a cheaper house.  Bush I proposed a 250K exclusion and the Clinton campaign upped it to 500K for a couple.  The exclusion keeps getting larger, not smaller.


*this is all based on my memory so may not be 100% accurate.