Real Estate Law · August 17, 2026 · 8 min read
I don't usually start a blog post with optimism about congressional action, but today I'm making an exception.
Realtor.com reported today that the More Homes on the Market Act is picking up momentum in Congress. The bill would double the current capital gains tax exclusion on home sales—from $250,000 to $500,000 for single filers, and from $500,000 to $1 million for married couples filing jointly.
That's a big deal. Especially here in the Baltimore-Washington corridor where home appreciation over the past decade has been, let's just say, generous to long-term homeowners.
I've sat at too many kitchen tables in Howard County and Montgomery County watching sellers do mental math on napkins, trying to figure out whether they could afford to sell and move closer to grandkids or downsize without getting hammered by capital gains. This bill, if it passes, would ease that squeeze considerably.
Let's talk through what it means, who it helps, and what you should actually do with this information.
Right now, if you've lived in your home for at least two of the last five years and it's your primary residence, you can exclude up to $250,000 in profit from capital gains tax if you're single, or up to $500,000 if you're married filing jointly. Anything above that gets taxed at your long-term capital gains rate—currently 0%, 15%, or 20% depending on your income, plus the 3.8% net investment income tax for high earners.
The More Homes on the Market Act would double those thresholds. Single filers could exclude up to $500,000. Married couples could exclude up to $1 million.
The logic behind the bill is simple: many homeowners—particularly older sellers in high-appreciation markets—are sitting on significant gains but don't want to trigger a tax bill by selling. If you raise the exclusion, the theory goes, more inventory hits the market. More inventory means more choices for buyers, which could help ease the affordability crisis we've been covering in posts like this one about Maryland's inventory crunch.
The National Association of REALTORS® has been advocating for this change for years, and it looks like the idea is finally gaining bipartisan traction.
Let's be honest: not everyone needs a $1 million exclusion.
If you bought a home in Cecil County in 2018 for $310,000 and it's worth $390,000 today, you're nowhere near the current $500,000 exclusion for a married couple. You're fine. Sell whenever you want.
But if you bought a townhouse in Silver Spring in 2005 for $425,000 and it's now worth $780,000? You've got $355,000 in gains. Still under the current married exclusion, but it's getting close—and if you've done significant renovations that don't count toward your cost basis, you might be nervous.
Here's where I see the biggest impact locally:
Appreciation in the inner suburbs has been relentless. I've had clients in Bethesda, Columbia, and Annapolis who purchased homes in the late 1990s or early 2000s and are now sitting on seven-figure valuations. Many are empty-nesters who want to sell and move to a one-level home in Harford County or even out to York County, PA. But the tax bill has been a real deterrent.
If you bought in Shaw, Bloomingdale, or H Street before those neighborhoods exploded, your gains might easily exceed the current cap. The doubled exclusion would let you sell and relocate without a tax penalty.
Pennsylvania and Delaware have seen their own appreciation stories, particularly in walkable downtowns and near commuter rail. A doubled exclusion opens doors for retirees and relocators who've been locked in place by tax math.
I've worked with a few savvy clients who buy a fixer in Baltimore City, live in it for two years while renovating, then sell and repeat. The current exclusion works fine for one or two cycles, but the higher cap gives more headroom for ambitious projects or faster-appreciating neighborhoods.
Even if this bill passes, the basic rules still apply. You must have owned and lived in the home as your primary residence for at least two of the previous five years. The exclusion is generally available once every two years.
Second homes and pure investment properties don't qualify. If you're selling a rental in Prince George's County, you're subject to capital gains tax on the profit (minus depreciation recapture and adjusted basis). The More Homes on the Market Act won't change that.
Also worth noting: this bill is not law yet. It has momentum, but Congress has a funny way of letting good ideas die in committee. Don't make a major life decision based on legislation that hasn't passed. If you're thinking about selling your home in Harford County or Baltimore County and the exclusion matters to you, talk to a tax professional now about your current situation.
This is general information, not legal advice—for your specific situation, please consult a licensed real estate attorney.
You should also consult a CPA or enrolled agent who understands real estate transactions. I taught high school social studies for over a decade, but tax code still makes my eyes cross.
We've talked a lot lately about inventory. Prices are getting cut on 42% of listings in Maryland and DC, but total inventory is still historically low. Builders are struggling with affordability and margins, per HousingWire's builder sentiment report today.
One reason inventory stays tight: older homeowners who could sell but don't want to move because of transaction costs—financial and emotional. Reducing the tax friction won't solve everything (mortgage rates are still at 6.67% as of last week, per Freddie Mac), but it removes one barrier.
If even 5% of locked-in sellers in Montgomery County decide the math now works, that's dozens of additional listings. Multiply that across the region and you start to see meaningful impact.
I'm not naive. This won't flood the market overnight. But in a tight market, every bit helps.
Get a ballpark idea of your potential gain. Pull your original settlement statement (your title company or lender should have a copy if you've lost yours). Add up what you paid for the home, plus major capital improvements—new roof, HVAC system, additions, finished basements. Subtract that total from a realistic current market value. If you're anywhere near the current exclusion cap, start paying attention to this bill.
You might want to list sooner rather than later if the bill looks likely to pass but hasn't yet. Why? Because if it does pass, you might see a mini-surge of competing listings from other sellers in the same situation. It's the classic prisoner's dilemma—everyone waits, then everyone moves at once.
Or you wait for the bill to pass and enjoy the peace of mind. There's no one right answer; it depends on your timeline and risk tolerance.
More inventory is good for you. Period. It means more choices, less bidding-war insanity, and potentially softer prices. If this bill becomes law and does unlock a wave of seller activity in Howard County or Anne Arundel County, you'll have a better shot at finding the right home without waiving every contingency.
Want to know what's actually available right now in your target area? Take a look at current listings here or reach out and let's talk strategy.
I spent two decades in education before I got my real estate license. One thing I learned in the classroom and carried into this career: incentives matter. Policy matters. The tax code shapes behavior in ways most people don't see until it affects them directly.
The capital gains exclusion is one of the most powerful wealth-building tools in the U.S. tax code. Raising it doesn't just help individual sellers—it acknowledges that home prices have grown faster than the exclusion cap, which was last updated in 1997 at $250,000/$500,000 under the Taxpayer Relief Act.
A lot has changed in 29 years. A home that cost $200,000 in 1997 is worth nearly $450,000 today using average appreciation. In hot markets like Bethesda or Annapolis, it's worth far more. The exclusion should have been indexed to inflation decades ago; doubling it now is a reasonable (if overdue) correction.
Whether Congress actually passes it is another question. But the fact that it's gaining traction tells me lawmakers are at least starting to understand how the tax code interacts with the housing shortage.
I'll be tracking this closely. And if it passes, you'll hear about it here first—along with exactly what it means for sellers across Maryland, DC, Pennsylvania, and Delaware.
For now, mortgage rates are ticking up slightly (blame geopolitical tensions and oil price volatility, per Mortgage News Daily), and the market is still sorting itself out after a strange summer. But if you've been on the fence about selling because of tax concerns, this bill might be the nudge you need.
Just make sure you run the numbers with a pro before you make the call.
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“A house is made of walls and beams; a home is built with love and dreams.” — Ralph Waldo Emerson (attributed)