🏠 Is an Outdated Tax Rule Keeping Hampton Roads Homes Off the Market? 🤔

Hello Hampton Roads,

🏡 What’s the deal with the home sale tax cap—and is it hurting Hampton Roads? 

If you’ve owned your home for decades, you might be sitting on a goldmine of equity—but selling could trigger a hefty tax bill. That’s because the capital gains exclusion limit for home sales hasn’t changed since 1997—even though Hampton Roads home values have nearly tripled since then. This means many long-time owners could face unexpected tax bills if they sell, making them hesitant to list their homes.

So yes, an outdated tax rule might be locking up inventory and discouraging homeowners from selling. But two new bills in Congress could change that—and unlock opportunity for Hampton Roads buyers and sellers alike. 

🔑 Key Takeaways

• Current capital gains exclusion limits ($250K single / $500K married) haven’t been adjusted since 1997.

• Home prices have nearly tripled, making many long-time homeowners vulnerable to unexpected tax bills.

• Two bills—More Homes on the Market Act & No Tax on Home Sales Act—aim to fix this.

• Hampton Roads homeowners could benefit from increased inventory and tax relief.

• NAR estimates nearly 70% of homeowners may exceed the current exclusion by 2035

🏘️ Background: What’s “Locked-In” Home Equity—and Why It Matters in Hampton Roads

The capital gains exclusion lets homeowners avoid taxes on profits from selling their primary residence—up to $250,000 for individuals and $500,000 for married couples. But those limits were set in 1997 and haven’t kept pace with inflation or rising home values. In Hampton Roads, where property appreciation has surged in areas like Virginia Beach, Chesapeake, and Norfolk, many long-time owners are sitting on significant equity—but hesitant to sell.

Imagine a family who bought their home for $150,000 25 years ago and now sees it worth $700,000. Selling could trigger a taxable gain well beyond the current exclusion—potentially costing tens of thousands in taxes. That risk makes could be keeping these homes off the market.

This “lock-in effect” is especially pronounced among seniors and middle-class families who fear losing a chunk of their retirement nest egg to taxes. That hesitation keeps homes off the market, reducing inventory and driving up prices for first-time buyers and military families—two key demographics in Hampton Roads.

🏛️ Spotlight on the Two Reform Bills: What They Mean for Hampton Roads

Congress is considering two bills aimed at fixing this outdated tax rule. Here’s how they work—and why they matter locally:

1. More Homes on the Market Act (H.R. 1340)

• Introduced by: Reps. Jimmy Panetta (D–CA) and Mike Kelly (R–PA)

• What it does: Doubles the capital gains exclusion on the sale of a primary residence—from $250K to $500K for individuals, and from $500K to $1M for married couples filing jointly

• Why it matters: These thresholds haven’t been adjusted since 1997. This bill would also index the limits to inflation, ensuring they stay relevant over time.

• Impact on Hampton Roads: Long-time homeowners in Virginia Beach, Chesapeake, and Norfolk could finally sell without fear of losing equity to taxes—freeing up inventory for first-time buyers and military families.

2. No Tax on Home Sales Act (H.R. 4327)

• Introduced by: Rep. Marjorie Taylor Greene (R–GA)

• What it does: Eliminates the capital gains tax entirely on the sale of primary residences.

• Who benefits: Seniors, homeowners, and families who’ve built substantial equity over decades.

• Local impact: It could remove a major financial barrier for many Hampton Roads sellers, potentially boosting housing supply dramatically.

• Key distinction: Unlike the More Homes on the Market Act, this bill removes the dollar cap altogether, offering full tax relief on gains from primary home sales.

Provision	Current Law	More Homes Act	No Tax Act
Single Filer Exclusion	$250,000	$500,000	Unlimited
Married Filing Jointly	$500,000	$1,000,000	Unlimited
Inflation Adjustment	No	Yes	No

📣 President Trump has voiced support, saying, “We are thinking about no tax on capital gains on houses,” signaling growing momentum behind reform

🏡 What Should Hampton Roads Homeowners Do Now?

• Evaluate your equity: Check your home’s current value versus your purchase price.
• Consult a tax professional: Understand your potential tax exposure under current laws.
• Consider timing: If you’re thinking of selling, watch the progress of these bills—changes could affect your best move.
• Stay informed: Follow local real estate market trends, especially in Virginia Beach, Chesapeake, and Norfolk.

Being proactive now will help you make smarter, more profitable decisions, whatever happens with the legislation.

❓ FAQ: What Hampton Roads Homeowners Need to Know

1. What is the More Homes on the Market Act? It proposes doubling the exclusion limits and indexing them to inflation—$500K for individuals and $1M for couples. See https://www.congress.gov/bill/118th-congress/house-bill/1321

2. What is the No Tax on Home Sales Act? It would eliminate federal capital gains tax on primary home sales entirely. See https://www.congress.gov/bill/119th-congress/house-bill/4327/text/ihy

3. Who benefits most from these reforms? Long-time homeowners, especially seniors and middle-income families in high-appreciation areas like Hampton Roads.

4. Will this increase housing inventory? Yes—by removing tax barriers, more homeowners may choose to sell, easing supply constraints.

5. What’s the timeline for these bills? Both are in early stages, but bipartisan support and presidential interest suggest momentum is building

📝 Summary & Conclusion

The capital gains exclusion limit is a relic of the 1990s—and it’s quietly distorting today’s housing market. In Hampton Roads, where equity-rich homeowners are staying put to avoid taxes, inventory remains tight and prices climb higher. Reforming this outdated policy could unlock thousands of homes, ease affordability, and empower families to make life-changing moves without financial penalty.

📞 Ready to Sell or Buy Strategically?

📅 Curious How These Tax Changes Could Affect You?

If you're thinking about selling—or just want to know how much equity you really have—let’s talk. I’ll walk you through your options and how these proposed changes could impact your bottom line.

📞 Schedule Your Free Discovery Call

Thanks for Reading,

______________

Liz Schuyler, Virginia Beach Real Estate Agent

RE/MAX Allegiace

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