Wouldn’t it be great if there were more homes for sale?
Well, that might be closer to reality—thanks to new legislation being considered at both the California state and federal levels.

I’m Brendan Moran with Five Star Real Estate, and here's what you should know about potential changes to the capital gains tax exemption—and how they might impact the housing market.

What Is the Current Capital Gains Tax Exemption?

When you sell your primary residence, you may qualify to exclude a portion of the profit (equity) from capital gains taxes. The current limits are:

• $250,000 for single homeowners

• $500,000 for married couples filing jointly

These amounts haven’t changed in decades—even though home prices have risen dramatically, especially in places like California.

What’s Being Proposed?

In California

A bill is moving through the state legislature that would increase the exemption threshold, possibly up to $300,000–$350,000 for single sellers. While it’s a smaller change, it’s still aimed at helping sellers keep more of their profits.

At the Federal Level

This is where it gets really interesting.
Proposed federal legislation would double the exemption:

• From $250,000 to $500,000 for single homeowners

• From $500,000 to $1 million for married couples

This could have a massive impact on seller behavior.

Why This Matters for the Housing Market

Right now, many longtime homeowners are sitting on significant equity—but they’re hesitant to sell because of the hefty tax hit they’d take. If these proposals pass, sellers would be able to keep more of their earnings, making it more attractive to sell and move.

More sellers = more inventory = more opportunities for buyers—especially first-time buyers who are currently priced out due to low supply.

In a place like California, where housing is already at a premium, this could be a game changer.

What Should You Do?

It’s still early, and none of this is law—yet. But it’s something to keep an eye on if you’re considering selling, downsizing, or just want to understand how this could affect your equity position.

If you’ve got questions about capital gains, equity, or selling your home, let’s talk.
I’m Brendan Moran with Five Star Real Estate—we’re here to help you navigate the market smartly and confidently.