Capitulating to nearly three decades of home price appreciation that has left millions of American homeowners "locked in" to their properties, momentum is surging on Capitol Hill for legislation aimed at modernizing federal capital gains tax rules for primary residences.  

The bill — known as the More Homes on the Market Act — has picked up significant support, bringing its total backing to 174 lawmakers in Washington, D.C., with 151 co-sponsors in the House and 23 in the Senate.  

Supported by a growing coalition of bipartisan legislators and industry trade groups like the National Association of Realtors (NAR), the bill addresses a key tax friction point: the static capital gains tax exclusion limit for home sales, which has not been updated since 1997.  

Doubling 1997 Limits to Reflect 30 Years of Home Equity Growth
Under current Section 121 tax code rules, individual homeowners can exclude up to $250,000 in capital gains from the sale of a primary residence, while married couples filing jointly can exclude up to $500,000. While these caps provided substantial tax relief when established nearly 30 years ago, skyrocketing property values across the U.S. have caused many long-term homeowners to exceed those limits.  

The More Homes on the Market Act proposes:

• Doubling the exclusion caps: Increasing the exclusion limits to $500,000 for single filers and $1 million for married joint filers.
• Indexing for inflation: Automatically adjusting these exclusion limits for inflation on an annual basis to prevent future bracket creep.

For homeowners who have lived in their homes for 10, 20, or 30 years—particularly in high-cost metro areas—selling under existing law often triggers a steep tax bill. That financial penalty incentivizes owners to hold onto properties longer than they otherwise would, suppressing inventory levels across the nation.

Unlocking the "Lock-In" Effect
Housing market advocates argue that updating capital gains limits isn't just about tax savings; it's a vital supply-side mechanism to release much-needed resale inventory.  

"This is really about people who want to move," explained Evan Liddiard, Director of Federal Tax Policy for the National Association of Realtors (NAR). "We have families that need to size up their homes but don't have access because this tax is locking up inventory."  

Many empty-nesters and retirees find themselves residing in large, multi-bedroom single-family homes long after their children have moved out. Because selling meant taking a substantial capital gains tax hit on millions in accumulated equity, many choose to stay put. This creates a ripple effect down the housing ladder, preventing growing families from buying mid-sized homes and keeping first-time buyers stuck in rentals or small starter properties.  

Strong Bipartisan Footing in Capitol Hill
Unlike many contentious economic policy debates, the More Homes on the Market Act has found widespread appeal across political lines. Dozens of lawmakers have added their names as co-sponsors over recent months.  

Supporters emphasize that the legislation achieves two complimentary goals:

1. Protects Homeowner Equity: Allows Americans to keep more of the wealth built up over decades in their primary asset.
2. Encourages Mobility: Unblocks housing supply without spending taxpayer dollars on new construction subsidies or government initiatives.

What's Next for the Legislation?
While support for the bill continues to grow in both chambers, lawmakers will need to navigate broader tax discussions as Congress weighs comprehensive fiscal measures. However, with housing affordability and low inventory remaining top economic concerns for voters nationwide, backers are optimistic that the More Homes on the Market Act stands a strong chance of being packaged into upcoming tax legislation.