Staten Island Rep Introduces Legislation To Cut Capital Gains Taxes For Seniors Selling Their Homes

Malliotakis Introduces Legislation to Cut Capital Gains Taxes for Seniors Selling Their Homes

Editor’s note: Rep. Malliotakis has focused on helping seniors in our area before, including by increasing the SALT deduction and with other tax relief measures discussed in our previous coverage on this issue.  See below for charts of the amount of the capital gains tax based on income.  For seniors who are retired and on a low fixed income, where such a tax would be a burden, there is no tax.  The tax kicks in at levels over $48k per year for single,  $94k for married filing jointly, and $63k for Head of Household (presumably most seniors living alone). This would cover the average and below average retired New Yorkers, where the average total retirement income across the city is $59k, including 401ks and social security or disability income. Above that threshold brings a 15% tax, and for income above $500k annually, the tax is 20%. Inherited property is treated differently, where the initial value assessment happens when the owner passes rather than going back to the original transaction.  

On Newsmax, Malliotakis discusses the Nest Egg Protection Act.

(WASHINGTON, DC) — Congresswoman Nicole Malliotakis introduced H.R. 9064, the Nest Egg Protection Act, legislation to lower the capital gains tax burden for seniors selling their homes, allowing them to keep more of their hard-earned equity while helping bring more homes onto the market.

In New York’s 11th Congressional District, where the median home price is over $700,000, many seniors who purchased their homes decades ago may face significant capital gains tax liability if they choose to sell or downsize. Under current law, individuals may exclude up to $250,000 in capital gains from federal taxes on the sale of their primary residence, while joint filers may exclude up to $500,000—exclusion amounts that have not been increased since 1997. Any gain above those amounts is subject to capital gains tax.

As the national housing shortage continues to drive up prices and put homeownership out of reach for many young families, Congresswoman Malliotakis’ legislation would bring relief to qualifying seniors by allowing them to keep more of the equity they built over a lifetime and, should they choose to sell, help bring more homes onto the market for younger families and first-time homebuyers.

The Nest Egg Protection Act would temporarily increase the capital gains tax exclusion to $1 million for individuals and married couples aged 65 or older. To qualify, homeowners must have owned their primary residence for at least 25 years.

“Too many seniors on Staten Island and in Brooklyn who purchased their homes decades ago and built equity over a lifetime are now facing the possibility of a significant capital gains tax bill if they choose to sell or downsize,” said Congresswoman Nicole Malliotakis. “My legislation would expand the capital gains tax exemption to provide meaningful relief and allow seniors to keep more of their hard-earned equity. By removing this tax barrier that discourages seniors from selling when they want to, we can protect their nest egg while making the American Dream of homeownership more attainable for younger families and first-time homebuyers.”

“The Staten Island Board of REALTORS supports the Senior Home Sales Incentive Act as a common-sense approach to increasing housing inventory while helping seniors keep more of the equity they have earned over a lifetime. By reducing a major tax barrier to selling, this proposal could encourage more longtime homeowners to right-size their housing and create opportunities for the next generation of homebuyers,” said Sandy Krueger, CEO, Staten Island Board of REALTORS.

“This legislation would have an immediate effect on inventory since it reduces some of the financial strain on seniors who are deciding to sell. It also will provide a strong benefit for those who have lost their partner by giving them a financial lift and assisting them in selling so that they can improve their quality of life without the fear of losing the equity in their home to capital gains taxes,” said Frank Reali, Broker, Safari Realty.

“This proposal represents a thoughtful and necessary initiative that would provide substantial benefits to many seniors in the years ahead. Numerous homeowners purchased their homes decades ago and have experienced significant appreciation in property values, often resulting in considerable capital gains tax liabilities when they decide to sell. Increasing the exemption for seniors who have resided in their homes for 25 years appropriately acknowledges their long-term investment, dedication, and contributions to their communities. This legislation would offer meaningful financial relief and assist many seniors in transitioning to the next stage of life with greater stability and peace of mind. A BIG THANK YOU TO OUR CONGRESSWOMAN – NICOLE MALLIOTAKIS,” said Madeline Caudiano, President of the Brooklyn Real Estate Board.

“This proposed legislation is keeping up with the current status of the real estate market. Pricing continues to increase, and for our seniors who have worked their entire lives to have the American dream of homeownership, they face the challenge of worrying about paying massive capital gains taxes when they helped build our neighborhoods and communities. Thank you Congresswoman Malliotakis for proposing this common sense legislation,” said George S. Wonica ‘Jr’ – Broker/Appraiser – REAL Brokerage & Past President – Staten Island Board of Realtors & Brooklyn Board of Realtors.

“It’s about time the IRS catches up with the real estate market, which is at the highest it’s ever been. The minimum house now is $1 million. It’s a great idea to help the seniors who paid their whole life so it’s about time that they get something back,” said Steve Maguire, Partner, Maguire Real Estate.

“For years, we’ve watched seniors become prisoners of their own success. They did everything right, bought a home, paid the mortgage, stayed in the community, and now the tax code punishes them for moving. Congresswoman Malliotakis’ proposal removes a major barrier, frees up housing inventory, and creates opportunities for both seniors and young families. It’s one of the smartest housing ideas I’ve seen in years,” said Celia lervasi, International Realty Services.

“Every real estate professional knows there are homes that are effectively frozen. Many seniors aren’t staying put because they want to, but because the tax consequences of selling have become too great. I thank the Congresswoman for recognizing that reality and introducing a bill that helps restore the freedom to make the housing decisions that are right for them. That’s good for seniors, good for families looking to buy a home, and good for the overall housing market,” said Joanne Costa, Joanne Costa Realty.

Capital Gains Tax Income Chart: 

Visit the above link for all income levels

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Congresswoman Malliotakis has consistently fought to make life more affordable for homeowners and seniors, helping secure an increase in the State and Local Tax (SALT) deduction cap to $40,000 and authoring the bonus senior deduction included in the Working Families Tax Cuts, which provides qualifying seniors age 65 and older with a bonus deduction of up to $6,000 for individuals and $12,000 for married couples, helping many keep more of their Social Security benefits tax-free. She is also a cosponsor of H.R. 1340, the More Homes on the Market Act, which would double the current home sale capital gains exclusion from $250,000 to $500,000 for individuals and from $500,000 to $1 million for married couples, with future increases adjusted for inflation.

Banner Image: Aging at home.  Image Credit – Vitaly Gariev