A duo of bipartisan U.S. House of Representatives lawmakers introduced a bill earlier this year that is designed to increase the supply of available homes on the market. And in order to bring more attention to the issue, the lawmakers recently made a public push about what the bill would do if passed.
The “More Homes on the Market Act,” unveiled in March by Reps. Jimmy Panetta (D-Calif.) and Mike Kelly (R-Penn.), would amend the tax code to incentivize more homeowners to sell their houses, increasing the supply of homes available on the market.
The bill would increase the sales gain tax exclusion to $500,000 for single filers and $1 million for joint filers, according to its current language. Currently, single homeowners who sell their home can only exclude $250,000 in gains from capital gains taxes while joint filers can exclude $500,000.
These were amounts “set in 1997 and not indexed for inflation,” Rep. Panetta’s March announcement stated. “This has had an outsized impact on California homeowners who face some of the highest housing costs in the nation.”
The pair introduced the same legislation in September 2022 under the prior Congress, but the bill did not survive beyond referral to the House Ways and Means Committee. The new version of the bill, House Resolution (H.R.) 1321, has picked up five additional cosponsors as it prepares to go to the same committee.
Rep. Panetta told MarketWatch in an interview last week that Congress can address housing supply constraints with the proposed legislation.
“It’s a pretty simple fix and a pretty straightforward bill,” Panetta said. “A lot of people who have owned homes for a long time are in that position of deciding, do I sell my home that has gained a tremendous amount of capital and then take a huge tax hit? Or do I just sit on it, and give it away?”
Housing affordability and supply is becoming an increasingly common focus for federal and state lawmakers and offers a source of bipartisan work at a time of intense political polarization.
Earlier this month, a bipartisan duo in the U.S. Senate introduced a bill that would address a shortage of affordable housing in rural communities by easing the process for non-profits to acquire properties with USDA rural housing loans. It would also decouple the related rental assistance so that the assistance doesn’t end when the mortgages mature.
Absent action at the federal level, states have been aiming to address housing supply issues in their own ways.
In Washington state, Gov. Jay Inslee (D) recently signed 10 different bills taking aim at supply and affordability issues, including a bill that lifts single-family zoning restrictions to allow for more affordable housing units, as well as easier accessory dwelling unit (ADU) permitting and construction within the state.
In Minnesota, the legislature recently approved bills that would preserve affordable housing projects and provide down payment assistance for first-time homebuyers.
They need to do this for “mom and pop” investors too.