Time to Heal Act
- Bill Number
- H.R. 7349
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-04: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-02-23T16:27:57Z
AI-Generated Summary
Purpose
The "Time to Heal Act" (H.R. 7349) aims to provide tax relief to individuals who have lost a spouse by allowing them to exclude a larger amount of capital gains when selling their primary home. Specifically, it ensures these individuals can claim the same $500,000 exclusion available to married couples filing jointly, without restrictions based on the time elapsed since the spouse's death.
Key Provisions
- Amendment to Tax Code: The bill modifies Section 121(b)(4) of the Internal Revenue Code of 1986, which governs exclusions on gains from the sale of a principal residence.
- For an individual selling their home where the spouse is deceased at the time of sale, the exclusion limit increases from $250,000 to $500,000.
- This higher exclusion applies if:
- The couple met the standard ownership and use requirements (typically owning and living in the home for at least 2 of the 5 years before the death) right before the spouse's death.
- The surviving individual has not remarried between the date of death and the end of the tax year in which the sale occurs.
- Effective Date: The changes apply to home sales and exchanges in tax years starting after the bill's enactment.
Significant Changes to Existing Law
- Under current law (Section 121), unmarried individuals (including surviving spouses) can exclude up to $250,000 in gains from selling a principal residence, while married couples filing jointly can exclude up to $500,000. The existing special rule for deceased spouses allows the higher exclusion but only for sales within about 2 years after the death (or up to 10 years in some cases with extensions).
- This bill removes the time limitation, allowing the $500,000 exclusion indefinitely for eligible surviving spouses who remain unmarried, promoting longer-term tax equity.
Potential Impacts
- On Citizens: Surviving spouses may face lower federal income taxes on home sale profits, easing financial burdens during grief and potentially encouraging home sales without heavy tax penalties. This could benefit older adults or those downsizing, increasing financial flexibility.
- On Government Agencies: The Internal Revenue Service (IRS) would administer the expanded exclusion, potentially leading to reduced tax revenue from affected sales (estimated impacts would depend on IRS projections, but no specific figures are in the bill).
- On International Relations: No direct impacts, as this is a domestic tax policy change.
Main Stakeholders Affected
- Surviving Spouses: Primary beneficiaries, particularly widows and widowers who own and sell jointly held homes without remarrying.
- Taxpayers and Homeowners: Broader group of unmarried individuals selling principal residences, though the change specifically targets those with deceased spouses.
- Internal Revenue Service (IRS): Responsible for implementing and enforcing the rule changes in tax filings and audits.
- Real Estate and Financial Advisors: May need to update guidance on tax implications for clients.
Notable Legal, Constitutional, or Political Implications
- Legal: Aligns with equitable tax treatment under the Internal Revenue Code by addressing a gap in spousal death provisions, potentially reducing future litigation over unequal exclusions. No challenges to constitutional principles like equal protection are evident, as it extends benefits without creating new disparities.
- Constitutional: Neutral; the change is a fiscal adjustment within Congress's taxing authority under Article I, Section 8 of the U.S. Constitution.
- Political: Reflects bipartisan interest in supporting families through tax policy (introduced by Rep. Barrett), but could spark debates on federal revenue loss versus social support. As a targeted amendment, it may influence broader housing or estate tax reforms.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2026-02-04: Referred to the House Committee on Ways and Means.
- 2026-02-04: Introduced in House
- 2026-02-04: Introduced in House
Bill Versions
- Time to Heal Act — issued 2026-02-04 — PDF (2 pages)