To amend the Internal Revenue Code of 1986 to temporarily increase the capital gains exclusion for any qualifying senior who se...
Officially: “To amend the Internal Revenue Code of 1986 to temporarily increase the capital gains exclusion for any qualifying senior who sells a principal residence during a qualifying year, and for other purposes.” Read the full text
What it does
Read it in plain language
1Temporary increase to capital gains exclusion for sale of a primary residence by a senior
This section would add a new, temporary rule to the tax code's exclusion for profit on the sale of a home (Internal Revenue Code section 121). For a sale or exchange of a qualifying residence that happens after December 31, 2026, and before January 1, 2031, the amount of gain a qualifying senior can exclude from tax would go up. A qualifying senior is someone who is at least 65 years old on the date of the sale or exchange. A qualifying residence is a principal residence that the taxpayer, or either spouse on a joint return, has owned for at least 25 years. If the seller is a qualifying senior who is not married on the date of the sale or exchange, the exclusion would be $1,000,000 instead of the usual $250,000. If the seller is married and files a joint return for the tax year of the sale or exchange, and either spouse is a qualifying senior, that same condition raises two exclusion amounts from $500,000 to $1,000,000: the usual joint-return exclusion, and the tax code's separate special exclusion for a qualifying surviving spouse (an unmarried person whose spouse died within the two years before the sale). If the seller is a qualifying senior who is married but files a separate return for that tax year, the exclusion would be $500,000 instead of the usual $250,000. This higher exclusion would apply to taxable years beginning after December 31, 2026.
Show official text
1. Temporary increase to capital gains exclusion for sale of a primary residence by a senior (a) In general Section 121(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (6) Special increased exclusion for sales by certain seniors during taxable years 2027 through 2030 (A) In general In the case of a sale or exchange of a qualifying residence after December 31, 2026, and before January 1, 2031— (i) in the case a qualifying senior who is not married on the date of such sale or exchange, paragraph (1) shall be applied by substituting $1,000,000 for $250,000 , (ii) the case of married individuals who make a joint return for the taxable year of such sale or exchange, if either spouse is a qualifying senior, paragraphs (2) and (4) shall each be applied by substituting $1,000,000 for $500,000 each place it appears, and (iii) in the case of a qualifying senior who is married and makes a separate return for the taxable year of such sale or exchange, paragraph (1) shall be applied by substituting 500,000 for $250,000. . (B) Qualifying senior For purposes of this paragraph, the term qualifying senior means an individual who is at least 65 years old on the date of such sale or exchange. (C) Qualifying residence For purposes of this paragraph, the term qualifying residence means a principal residence that has been owned by the taxpayer (in the case of a joint return, by either spouse) for at least 25 years. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2026.
Where it is
In the House.