MADISON — A Wisconsin Republican congressman is proposing legislation to completely eliminate the capital gains tax on home sales, arguing the move could help free up housing inventory for younger buyers.
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Rep. Scott Fitzgerald said many baby boomers are reluctant to sell their homes because of the significant tax burden they would face on properties they've owned for decades.
"There's a number of people that are, for the most part, baby boomers who are sitting on properties," Fitzgerald said in an interview with TMJ4's Chief Political Reporter Charles Benson. "They probably talked to their accountant or to the realtor, that if they sell that home, and maybe they built it 30, 40 years ago, and we all know the price of a home back then was not nearly what we're looking at now."
Watch: Congressman Fitzgerald proposes eliminating capital gains tax on home sales to boost housing market
Under current federal tax law, single homeowners can exclude up to $250,000 in capital gains from the sale of their primary residence, while married couples can exclude up to $500,000. Any profit above those thresholds is subject to capital gains tax.
Fitzgerald said those exemption amounts, which once seemed substantial, are no longer adequate given rising home values in southeastern Wisconsin and across the country.
"Which seemed like almost unreachable at one point, but we know what's happened in southeastern Wisconsin with the cost of homes," Fitzgerald said.
The congressman's proposed bill would eliminate the capital gains tax on home sales, removing the need for homeowners to document decades of home improvements to reduce their tax liability.
Fitzgerald argued the change could help address the current housing shortage by encouraging more baby boomers to sell their homes.
"What I think it would help with is the logjam we see right now where there's many baby boomers that are just kind of hung up on the idea that they're not going to pay that capital gains, so they're not going to sell that home, which means less opportunity for couples in their 20s and 30s to be able to find a home to purchase," Fitzgerald said.
The housing market has become increasingly challenging for younger buyers, with limited inventory driving up prices and creating bidding wars.
"All I hear from young couples is they can't find a home. They need the full 20% down to even make a bid. And then they're in a long list of 40, 50, 60 offers on any 3-bedroom ranch home right now, which is a huge problem for us in America," Fitzgerald said.
When asked whether the proposal would primarily benefit wealthy homeowners with expensive properties, Fitzgerald acknowledged the complexity of the issue.
"It's shocking, kind of the prices of even some 3-bedroom ranch homes at this point and the level that they reach," Fitzgerald said. "I'm not sure exactly kind of how this would play out, but we think it's kind of a move in the right direction."
Fitzgerald said he remains open to alternative approaches, including proposals that would double the current exemption amounts rather than eliminate the tax.
This story was reported by Charles Benson and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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