More from Trump: Thinking about no tax on capital gains on houses | investingLive

CNBC Eamon Javers is reviewing some of the comments from Trump at the White House, and says

• Trump is thinking about no tax on capital gains on house sales..

With the housing market sharply higher – especially since Covid – there are two things that may be keeping homeowners from selling their homes.

1. Homeowners are locked in lower rates. I refinanced at 1.99% for 15 years at the lows.

2. If they have oversized gains from owning a home for multiple decades, homeowners would need to pay tax on gains over a certain limit

Homeowners who locked-in lower rates don’t necessarily have earned enough profit to have capital gains of over $500,000 for married couples, or $250,000 for single people. The median sale price of a US home is only $422,000. They are influenced solely by the rate of their loan. If you are locked in a lower rate, paying 6.8% is significant. Homeowners may be locked in their rate and also in their house as a result.

Regarding, the capital gains, there is a slice of homeowners who have been in a home for multiple decades, and they live in areas where appreciation has been great over those decades. They may therefore have capital gains of $1 million or more on their homes. The current law is that if you have capital gains over $250,000 if you’re single or $500,000 if married and filing jointly you pay a tax on that incremental gain. As a result, homeowners may be inclined to just stay in the old homestead if possible financially.

The idea is that by taking away the capital gains – or perhaps raising the limit – more homeowners would be inclined to sell..