Voters Want Congress to Repeal the Homeowner Inflation Tax

A new national poll released by the American Property Owners Alliance shows voters are ready for Congress to fix one of the most outdated parts of the tax code: the capital gains tax on home sales.

The survey, conducted by OnMessage Public Strategies, found that 70% of voters oppose the current capital gains tax on home sales, including majorities across the political spectrum. The poll also found that 82% of Americans support adjusting the tax to account for inflation, with support topping 80% among Democrats, Independents, and Republicans.

Washington should take the poll as a clear signal that voters want the tax code to stop punishing homeowners for inflation.

The Current Tax Hits Middle-Class Homeowners

Under current law, homeowners can exclude up to $250,000 in capital gains from the sale of a primary residence, or $500,000 for married couples filing jointly. Those thresholds were set in 1997 and have never been indexed to inflation.

Over time, inflation has pushed more homeowners closer to a tax bill even when the real value of their home has not increased by as much as the paper gain suggests. In high-cost housing markets, long-time homeowners can face a tax penalty simply because prices rose over many years.

The poll shows voters see the problem. Nationwide, 56% say the capital gains tax on home sales causes challenges for the middle class, while only 26% say it is necessary to make the wealthy pay their fair share.

That finding cuts through the usual class-warfare rhetoric because this tax does not only affect the wealthy. It can hit families, retirees, and homeowners who built equity over decades and now face a tax code that fails to account for inflation.

The Legislative Fix Is Already on the Table

Congress already has a direct solution in front of it.

The Center for a Free Economy recently organized and led a coalition letter to Speaker Mike Johnson and Senate Majority Leader John Thune urging action on H.R. 1340 and S. 3332, the “More Homes on the Market Act.” The legislation would restore the real original value of the home sale capital gains exclusion and index it to inflation going forward.

The coalition letter was signed by 40 conservative leaders and organizations across the free-market policy community. It urged Congress to act without delay because the outdated exclusion punishes long-time homeowners for selling and makes the housing supply crunch worse.

The new poll shows voters agree with the core reform. They do not want Washington taxing homeowners on inflation, and they support a legislative fix that protects families from phantom gains.

Inflation Should Not Create a Taxable Gain

A homeowner should not owe capital gains tax on inflation.

When a family sells a home after many years, the listed gain often reflects rising prices across the economy, not a true increase in wealth. Taxing that paper gain treats inflation like income.

This is bad tax policy because it discourages homeowners from selling, keeps some families locked in homes that no longer fit their needs, and makes it harder for new buyers to find available homes.

Indexing the home sale exclusion to inflation would be a simple, fair reform. It would update the tax code for the modern housing market and protect homeowners from being taxed on phantom gains.

Voters Across Party Lines Support Reform

The strongest finding in the poll is the breadth of support. 82% of Americans support adjusting the current capital gains tax on home sales to account for inflation, including more than 80% of Democrats, Independents, and Republicans.

Agreement like this is rare in tax policy, and Congress should treat it as an opportunity to fix a problem voters already understand.

Homeowners should be able to move, downsize, relocate, or sell without facing a tax penalty driven by inflation. Updating the home sale tax rules would help protect property rights, improve fairness, and remove one more barrier from the housing market.

CFE Takeaway

The new American Property Owners Alliance poll confirms what homeowners already know. The capital gains tax on home sales is outdated, unfair, and badly in need of reform.

The “More Homes on the Market Act” would fix the problem by restoring the real value of the home sale exclusion and indexing it to inflation going forward.

Voters across the political spectrum support the change. Congress should listen and put H.R. 1340 and S. 3332, the “More Homes on the Market Act,” up for a vote.