Does It Make Sense To Exempt Residences From Cap Gains?

Last week, President Trump said he is considering a proposal to exempt from tax all gains from the sale of a homeowner’s primary residence. Under current law, taxpayers can exclude up to $250,000 ($500,000 married filing jointly) in capital gains. Taxpayers must have lived in and owned the home for at least two of the five years prior to the sale. These exclusion amounts were established in 1997 and are not adjusted for inflation. While there are some sound policy arguments in favor of this change, the advantages are modest and not outweighed by the disadvantages. Read Full Article »