Congressman Mike Thompson Urged to Modernize Federal Capital Gains Tax Exclusion for Housing Mobility
Congressman Mike Thompson, representing Napa and Sonoma communities, is being urged to support legislation aimed at modernizing the federal capital gains tax exclusion on the sale of a primary residence. The current exclusion, set at $250,000 for individuals and $500,000 for married couples filing jointly, has remained unchanged since its establishment in 1997. This policy, which has not kept pace with the significant rise in home prices over nearly three decades, is creating a 'capital gains lock-in' effect. Homeowners who might otherwise sell their properties to downsize, relocate for work, accommodate growing families, or address changing life circumstances are reportedly hesitant due to the prospect of a substantial federal tax bill on their gains. This reluctance contributes to limited housing inventory, particularly in regions like the North Bay, where housing supply is already constrained. 
