American Dream Act
Summary
The American Dream Act aims to amend the Internal Revenue Code of 1986 by excluding capital gains from the sale of real property to first-time homebuyers by individuals aged 65 or older. This exclusion applies if the property is sold for $500,000 or less and the buyer affirms their first-time homebuyer status under penalty of perjury. The Act is set to apply to sales after December 31, 2026, and will terminate after December 31, 2031.
Expected Effects
This bill, if enacted, would provide a tax incentive for seniors to sell their homes to first-time homebuyers. This could potentially stimulate the housing market and make homeownership more accessible to younger individuals and families. The exclusion of capital gains would only apply for a limited time, from 2027 to 2031.
Potential Benefits
- Increased Homeownership: Helps first-time homebuyers enter the housing market.
- Financial Relief for Seniors: Provides tax relief to seniors selling their homes.
- Stimulates Housing Market: Encourages transactions in the real estate sector.
- Potential Economic Boost: Could lead to increased spending on home-related goods and services.
- Intergenerational Transfer: Facilitates the transfer of housing stock from older to younger generations.
Potential Disadvantages
- Limited Scope: Only benefits a specific subset of sellers (65+) and buyers (first-time).
- Potential for Abuse: Requires strict enforcement to prevent fraudulent claims of first-time homebuyer status.
- Complexity: Adds complexity to the tax code.
- Market Distortion: Could artificially inflate prices in certain segments of the housing market.
- Sunset Provision: The temporary nature of the exclusion may create uncertainty and limit its long-term impact.
Constitutional Alignment
The American Dream Act falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill aims to promote the general welfare by incentivizing homeownership, which aligns with the broader goals stated in the Preamble. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).