To amend the Internal Revenue Code of 1986 to eliminate the dollar limitations on the exclusion of gain from sales of principal residences, and for other purposes.
Summary
H.R. 7034 aims to amend the Internal Revenue Code of 1986 by eliminating dollar limitations on the exclusion of gain from the sales of principal residences. This bill, introduced in the House of Representatives, seeks to modify Section 121 of the tax code. The proposed changes would impact how individuals are taxed on profits from selling their homes.
Expected Effects
If enacted, H.R. 7034 would remove the existing caps on the amount of profit a homeowner can exclude from their taxable income when selling a primary residence. This could result in significant tax savings for some homeowners, particularly those in high-value real estate markets. The changes would apply to sales and exchanges occurring after the enactment date of the Act.
Potential Benefits
- Potential for increased tax savings for homeowners selling their primary residences.
- Simplification of the tax code by removing specific dollar limitations.
- May incentivize home sales, potentially boosting the real estate market.
- Could free up capital for homeowners to reinvest in other assets or stimulate the economy through spending.
- Reduced complexity in tax calculations related to home sales.
Most Benefited Areas:
Potential Disadvantages
- Potential revenue loss for the federal government due to reduced capital gains tax collection.
- May disproportionately benefit higher-income individuals who own more expensive homes.
- Could lead to increased housing prices in certain markets if demand increases.
- The change might complicate long-term fiscal planning due to unpredictable revenue streams.
- Possible need for further legislative adjustments to address unforeseen economic consequences.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general constitutional principle of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1. The specific changes to the tax code fall within the broad authority granted to Congress to regulate taxation. However, the fairness and equity of the tax system are ongoing considerations, and the potential for disproportionate benefits to certain income groups could raise questions about equal protection under the law, although tax laws are generally given wide latitude.
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).