The No Tax on Home Sales Act: Could It Unlock Housing Inventory?

In July 2025, the No Tax on Home Sales Act (H.R. 4327) was introduced in the U.S. House of Representatives. The proposal is straightforward yet bold: eliminate federal capital gains taxes on the sale of a primary residence.

What the Law Looks Like Today

Currently, homeowners can exclude up to $250,000 in gains if single, or $500,000 if married. Those limits have not been adjusted in decades, even as home values in many markets have skyrocketed. As a result, more sellers—especially in high-appreciation areas—are finding themselves on the hook for tens or even hundreds of thousands in taxes when they sell their homes.

Why This Matters

Supporters argue that eliminating the tax entirely would reduce the “lock-in effect.” Many homeowners stay in properties longer than they’d like, whether they want to downsize, relocate, or trade up, simply because selling triggers a major tax bill. Removing that penalty could free up housing inventory, improve mobility, and create more opportunities for buyers in a historically tight market.

The Potential Upsides

• Unlocking Inventory: More homeowners may be willing to sell, easing today’s supply crunch.

• Mobility for Seniors: Older homeowners who are “house rich but cash poor” would have more freedom to move without losing a large portion of their equity to taxes.

The Possible Downsides

• Lost Federal Revenue: Billions in tax revenue could vanish, raising questions about budget trade-offs.

• Not a Silver Bullet: Even without capital gains taxes, challenges like high mortgage rates, moving expenses, and limited new construction will continue to weigh on housing supply.

The Bottom Line

The No Tax on Home Sales Act has sparked debate because it touches one of the largest financial assets most Americans own—their home. If passed, the bill could reshape selling behavior and bring much-needed inventory to the housing market. But it also raises tough questions about fairness, lost tax revenue, and whether it can meaningfully fix the broader supply problem.

For both homeowners and buyers, this is a bill worth watching closely. If it gains traction, the ripple effects could be felt across housing markets nationwide.