A 28-Year-Old Tax Rule Is Holding Back the Housing Market
For homeowners across the country—including here in New Smyrna Beach, outdated tax laws are making it harder to move, downsize, or cash out equity without facing a major tax hit. One of the biggest culprits? A capital gains tax exclusion cap that hasn’t been updated since 1997.
Currently, sellers can exclude up to $250,000 (or $500,000 for married couples) in gains on the sale of a primary residence. But with home values in coastal and luxury markets like ours tripling over the past three decades, more homeowners are being penalized for the very equity they’ve worked hard to build.
Locked-In Homeowners = Low Inventory
At NSB Homes, we’re seeing firsthand how this “lock-in effect” is impacting the New Smyrna Beach real estate market. Many long-time residents are hesitant to sell—not because they don’t want to—but because they’re afraid of triggering a huge tax bill.
According to research by the National Association of REALTORS® (NAR), more than 34% of U.S. homeowners already face this concern, and by 2035 that number could climb to nearly 70%. This includes retirees and middle-income families—especially those who have lived in their homes for 15+ years and seen significant appreciation.
The Wealth Homeowners Have Built Is Being Threatened
For most Americans, their home is the cornerstone of their net worth. In fact, the U.S. Census Bureau reports that home equity and retirement accounts make up over 60% of household wealth.
Here in New Smyrna Beach, many of our clients have gained hundreds of thousands in equity—especially in neighborhoods like North Beach, Venetian Bay, Isles of Sugar Mill, and Minorca Condos. NAR Chief Economist Lawrence Yun noted that the average homeowner has added more than $195,000 in wealth from appreciation alone over the past decade.
But unless Congress acts, these gains could be taxed away.
The Proposed Fixes in Congress
Two new bipartisan bills offer hope for homeowners:
- The More Homes on the Market Act would double the current exclusion limits and adjust them for inflation, offering long-term fairness and predictability.
- The No Tax on Home Sales Act goes even further by proposing the complete elimination of capital gains tax on primary residences.
Both pieces of legislation aim to unlock inventory, help aging homeowners right-size, and allow families to access their equity without penalty.
Support for Reform Is Growing—Even from the White House
Momentum is growing. President Trump recently indicated his administration is reviewing the idea of ending capital gains tax on home sales, and bipartisan support is lining up behind these changes.
As NAR’s Shannon McGahn put it:
“This is not about speculation. It’s about protecting the equity of homeowners and making the market work better for everyone.”
What This Means for New Smyrna Beach Sellers
If you’re considering selling a home in New Smyrna Beach, particularly a waterfront, historic, or luxury property, this reform could significantly affect your bottom line. Knowing your capital gains exposure is essential—especially if your property has appreciated beyond the current thresholds.
At NSB Homes, we specialize in helping homeowners navigate these complex decisions with clarity, care, and strategy.
Ready to Explore Your Options? Let’s Talk
We’ve helped thousands of families just like yours build wealth through real estate in New Smyrna Beach. Whether you’re selling your legacy property, planning for retirement, or simply exploring next steps—we’re here to guide you.
When Local Knowledge Is Required… Insist on NSB Homes.
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