A home that was bought for a modest sum decades ago and is now worth well over a million dollars can hand its owner a tax bill instead of a clean payday. A bill introduced in the House would change that for older sellers, temporarily raising the capital-gains exclusion on a primary residence to $1 million for homeowners age 65 and older. The measure is a proposal, not law, but it targets a tax break frozen since 1997 and a wave of longtime owners whose home equity has outrun the exemption Congress set nearly three decades ago.
What the Nest Egg Protection Act would change
Under current law, a homeowner selling a primary residence can exclude a fixed slice of the profit from federal capital-gains tax, and anything above that line is taxable. The thresholds have not moved in more than a generation, even as home values across much of the country have multiplied. For a retiree who bought a house in the 1980s or 1990s and watched it appreciate, the gap between the sale price and the original cost can easily blow past the ceiling.
The bill, the Nest Egg Protection Act, was introduced by Representative Nicole Malliotakis and would temporarily lift the exclusion to $1 million for both individuals and married couples aged 65 or older. To qualify, a homeowner would need to have owned the primary residence for at least 25 years — a condition aimed squarely at longtime owners rather than recent buyers or investors flipping property for a quick gain.
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How today’s exclusion leaves longtime owners exposed
The existing break is generous on paper but dated in practice. The Internal Revenue Service’s rules on the sale of a home let a single filer exclude up to $250,000 of gain and a married couple filing jointly up to $500,000, provided ownership and use tests are met. Those dollar figures were written into law in 1997 and have never been indexed to inflation, so their real value has eroded every year that housing prices climbed.
The result is a tax that increasingly lands on ordinary retirees rather than the wealthy. A widow who bought a family home for $80,000 and could sell it for $900,000 faces gain far above the $250,000 single-filer limit, and the excess is taxable at capital-gains rates. Supporters of the change argue that owners in this position often stay put not by choice but to avoid the bill, keeping homes off a tight market that younger buyers are struggling to enter.
The 25-year ownership test is what separates this proposal from a broad tax cut. By tying the larger exclusion to a quarter-century of ownership and an age of 65 or older, the bill would direct the benefit toward people who bought long ago and held through decades of appreciation, rather than toward anyone selling a recently purchased home. That framing is central to how its sponsor has pitched it as relief for seniors rather than a windfall for speculators.
Where the measure stands and what would have to happen next
The bill is early in the legislative process and carries no guarantee of becoming law. Like every tax measure originating in the House, H.R. 9064 was referred to the Ways and Means Committee, the panel that would have to advance it before any floor vote, and most bills introduced in any given session never reach that stage. Nothing about the current exclusion changes unless and until the measure passes both chambers and is signed.
It is not the only effort aimed at the same problem. A separate bipartisan bill, the More Homes on the Market Act, would double the existing exclusion to $500,000 for individuals and $1 million for couples of any age and index the amounts to inflation going forward. The two approaches differ — one targets seniors with a long ownership history, the other broadens the break for all sellers — but both reflect growing pressure to update a threshold left untouched since the Clinton era.
For homeowners weighing a sale, the practical takeaway is caution rather than celebration. A proposal is not a rule, and structuring the timing of a home sale around a bill that has cleared no committee would be a gamble. The details that matter most to a seller — whether the change is retroactive, how long the temporary increase would last, and which tax years it would cover — are exactly the kind of provisions that shift as legislation moves, if it moves at all.
What the bill does signal is that the pressure on an outdated exclusion is building from more than one direction. Whether relief ultimately arrives through a senior-specific measure like this one or a broader across-the-board increase, the underlying complaint is the same: a tax break designed for 1997 home prices is catching retirees who did nothing but hold onto a house that appreciated. Until Congress acts, the current limits still govern every sale, and older owners sitting on large gains remain squarely on the hook.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
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