Tax Proposals That Could Make Buying and Selling Easier

By Rebecca Durfey

Rebecca Durfey brings over 20 years of experience in real estate transactions within Maricopa County. Despite managing multiple clients simultaneously, her primary focus is to provide a personalized experience that makes you feel like her sole priority. Rebecca and her team are dedicated to efficiently achieving the desired outcomes for each client they serve.

I want to share something a little different today. These aren’t current proposals, and they’re not pending legislation. They’re just two ideas I’ve been thinking about that I believe could make a real difference for buyers and sellers if someone with a say decided to explore them. Think of this as “two tax changes I’d love to see if I had a vote.”

Raise the capital gains exclusion for primary residences. Right now, if you sell your primary residence, you can exclude up to $250,000 in capital gains if you’re single and up to $500,000 if you’re married. Those numbers haven’t changed since 1997. Home values have gone up dramatically since then, but the exclusion hasn’t kept pace.

For homeowners who’ve been in their home for a long time and built significant equity, that gap creates a real problem. They know that selling could trigger a large tax bill on the gains above that cap, and that makes it feel like they can’t afford to move to the next property. It’s essentially handcuffing them to their current home. If we raised that exclusion, say by another $250,000, it could open things up considerably.

Homeowners with that freed-up equity could purchase their next home with cash, make a larger down payment, or use the difference to buy down their interest rate. Three out of 10 buyers are already purchasing with cash. Imagine what happens when more sellers can actually access their equity without a major tax penalty standing in the way.

Allow homeowners to roll their full equity into the next home tax-free. This one is similar in concept to a 1031 exchange, which investment property owners already use to defer capital gains by rolling proceeds from one property into the next. My idea is to extend that same principle to primary residences.

If a homeowner sells their home and puts the full equity into their next primary residence, that transfer wouldn’t trigger any capital gains tax at all. For people who’ve held onto their property for years and built a healthy equity position over time, this would give them real flexibility to move, downsize, relocate, or simply find a home that fits their life better without a tax penalty for doing so.

Why do these matter? There are other proposals floating around, like 50-year mortgages or letting homeowners take their interest rate with them to their next property. I don’t think either of those is the right path.

A 50-year mortgage just means paying more interest over a longer period. And making interest rates portable creates a logistical challenge that would be incredibly difficult to implement. What I’m talking about is simpler. Open up the financial barriers that are keeping people from moving, and let the market do what it does when people have more flexibility.

I think right now is actually a good time to be a buyer in Arizona. The negotiating opportunities are strong, and that hasn’t always been the case. I also think it’s a good time to sell whenever the timing is right for you. No matter when that time comes, I’ll be here to communicate, advocate, guide, and educate, no matter which market we’re in, because you deserve my very best.

Call or text me at 623-297-4536, email me at rebeccadurfey@kw.com, or visit rebeccadurfey.com. I look forward to hearing from you.