Rep. Nicole Malliotakis introduced the Nest Egg Protection Act, which targets a pain point for aging homeowners selling their primary residences. The bill would raise the capital gains tax exclusion from the current $250,000 for single filers (and $500,000 for married couples) to $1 million for senior homeowners who have owned their homes for at least 20 years.
The timing matters. Many seniors bought homes decades ago at fraction-of-today's prices. A retiree who purchased a home in Brooklyn or suburban markets for $150,000 in the 1990s could easily see it valued at $800,000 or more today. Under current law, they owe federal capital gains taxes on the profit above the $250,000 threshold. The Malliotakis proposal would shelter significantly more of that gain from taxation.
For sellers, the math changes substantially. A senior couple selling a home with a $700,000 gain would owe zero federal capital gains tax under the new rule, versus owing taxes on $200,000 of gains today (at top rates, potentially $30,000 to $60,000 depending on income level and state taxes).
Landlords and investors do not benefit. The exclusion applies only to primary residences for eligible seniors, not investment properties or second homes. That keeps the tax code tightly focused on protecting owner-occupants.
The proposal arrives as housing affordability presses seniors into decisions they would rather delay. Some downsize to access home equity for retirement income. Others stretch home equity lines of credit to cover healthcare costs. Reducing the tax bite on home sales could give these households more flexibility and keep more capital in their pockets.
Opponents likely argue the provision costs the Treasury revenue at a time of fiscal constraints. Supporters counter that seniors earned these homes over decades and deserve relief