Dear Cape Friends,
If you’re new here, welcome. If you’ve been with me for a while, welcome back. Each week I share Cape Cod Real Estate with a side of humor, common sense, and a splash of salt air.
Let’s gently peek into Washington DC scuttlebutt for a moment… Before everyone starts reaching for Pepto-Bismol, hear me out because a conversation is starting that could matter to homeowners more than most people realize.
What’s Being Talked About
Loathe him, love him, or prefer to avoid politics at all costs, President Trump and policymakers from both sides of the aisle are increasingly talking about capital gains taxes on home sales again.
Ideas being floated in Congress include:
• Raising the current exclusion limits (which haven’t moved in nearly 30 years)
• Creating targeted exemptions for seniors or certain buyers
• And yes - one proposal that would eliminate federal capital gains tax on primary home sales entirely
Important note: Nothing has changed yet. (This is conversation - NOT law.) But it’s a conversation worth paying attention to..
If you’re curious, I’ve linked a neutral article below that explains the proposals in plain English - https://www.rainingpennies.com/taxes/will-congress-update-the-home-sale-exclusion/
The Rule That Hasn’t Changed Since 1997
Quick refresher:
When you sell your primary home, the IRS currently allows you to exclude up to:
• $250,000 of profit if you’re single
• $500,000 if you’re married
Anything above that can be subject to capital gains tax. That rule was created in 1997
Back then:
• No iPhones - No social media (crazy right?)
• The median home price in Chatham was roughly $300K. Today, the median home price in Chatham sits around $1.5M.
That’s not a typo. And it helps explain why this conversation is starting to – well, percolate again. Stay with me.
What This Could Look Like in Real Life
Let’s make this real for a minute. Here is the quickie math;
Imagine a couple who bought a Chatham home in the late 1990s for $350,000. Fast forward to today, and that same home might reasonably sell for $1,500,000. That’s a gain of roughly $1,150,000.
Under current tax rules, a married couple can exclude $500,000 of that gain. That still leaves $650,000 potentially subject to capital gains tax.
For many long-time homeowners, the appreciation on their home is no longer measured in tens of thousands of dollars - it’s measured in hundreds of thousands, sometimes more.
Why This Matters on the Lower Cape
Many Cape homes were purchased in the 80s, the 90s and the early 2000s – long before todays prices. And the appreciation since then has been substantial.
For many long-time owners, the gain on their home may now exceed the current exclusion limits - sometimes by a wide margin.
Which means this conversation in Washington DC could eventually affect:
• Downsizing decisions
• Retirement moves
• Estate planning
• Timing of future sales
Again - nothing has changed today. But, markets often react before legislation becomes reality.
So What Should Homeowners Do?
Nothing dramatic – No rush, just awareness.
Real Estate decisions happen over years. And when potential policy changes begin to circulate, it can be helpful to understand how your equity position looks under today’s rules.
No politics. No pressure. No Pepto Bismol - Just information.
Or, as Will Ferrell might say in his legendary Tight Pants skit… things can get a little constrained. ( hit play - https://youtu.be/-qdNy_vz-gM ) “You sippin’ my soupay, Guadalupe?”🤣
Back to Real Estate: As always, I’ll keep watching the big picture so you don’t have to.
If you’re around Friday morning, I’ll be ‘sippin my soupay’ at the Chatham Perk from 8:00–9:00am. As always, coffee’s on me!
See you around the elbow,
Paul
P.S. If you’re starting to think about buying or selling, PaulBorde.com is a good place to browse listings, catch past newsletters, and stay current on the market - and, if I may say so, revisit a few of my Pulitzer Prize–level past newsletters.