Making Homeownership Affordable Again Act
- Bill Number
- H.R. 7400
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-05: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-02-23T16:28:26Z
AI-Generated Summary
Purpose
The "Making Homeownership Affordable Again Act" (H.R. 7400) aims to reduce the tax burden on homeowners by fully exempting capital gains from the sale of a principal residence or any residence sold to a first-time homebuyer. This encourages homeownership and facilitates easier entry into the housing market for new buyers by eliminating federal income taxes on profits from such sales.
Key Provisions
- Full Exclusion of Gains from Principal Residences: Removes the current dollar limits on the tax exclusion for gains from selling a primary home (previously up to $250,000 for single filers and $500,000 for married couples filing jointly), allowing all gains to be excluded if ownership and use requirements are met (generally two out of the last five years).
- Exclusion for Sales to First-Time Homebuyers: Permits the full gain exclusion even if the seller does not meet standard ownership/use tests, as long as the buyer qualifies as a first-time homebuyer. A first-time homebuyer is defined as an individual (and their spouse, if married) who has not owned a principal residence in the three years before the sale.
- Effective Date: Applies to sales and exchanges after the bill's enactment.
Significant Changes to Existing Law
- Amends Section 121 of the Internal Revenue Code of 1986 by striking the dollar caps and related paragraphs in subsection (b), redesignating others for consistency, and making conforming updates to subsections (c) and (d).
- Expands the exceptions in Section 121(c)(2)(B) to include sales to first-time homebuyers, adding a new definition for this term. This broadens eligibility beyond current rules, which only allow partial exclusions in cases like job changes, health issues, or unforeseen circumstances.
Potential Impacts
- On Citizens: Homeowners could save significantly on taxes when selling, potentially increasing housing market liquidity and encouraging upgrades or downsizing. First-time buyers may benefit from more sellers willing to offer properties without tax penalties, lowering barriers to entry and improving affordability.
- On Government Agencies: The Internal Revenue Service (IRS) would see reduced tax revenue from capital gains, potentially straining federal budgets. No direct impact on international relations is noted.
- Broader Effects: Could stimulate real estate activity, but might exacerbate housing inequality if gains exclusions favor wealthier homeowners with larger profits.
Main Stakeholders Affected
- Homeowners and Sellers: Primary beneficiaries through tax relief on home sale profits.
- First-Time Homebuyers: Gain easier access to properties via tax-incentivized sales.
- Real Estate Industry: Agents, lenders, and developers may see increased transactions and market activity.
- Taxpayers and Government: Indirectly affected through lower federal revenue, potentially requiring budget adjustments.
- Low- and Middle-Income Families: Could promote mobility, though benefits depend on home value appreciation.
Notable Legal, Constitutional, or Political Implications
- Legal: Simplifies tax code administration by removing caps, but requires IRS updates to forms and guidance for enforcement. No challenges to constitutional authority (Congress's power to tax under Article I) are apparent.
- Political: Aligns with pro-homeownership policies, potentially appealing to voters in housing-stressed areas, but could face criticism for reducing revenue without offsets, raising deficit concerns. As a revenue measure, it may need reconciliation procedures if passed via budget processes.
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
- 2026-02-05: Referred to the House Committee on Ways and Means.
- 2026-02-05: Introduced in House
- 2026-02-05: Introduced in House
Bill Versions
- Making Homeownership Affordable Again Act — issued 2026-02-05 — PDF (4 pages)