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An Evaluation of the One‐Time Capital Gains Exclusion for Older Homeowners

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  • Sandra Newman
  • James Reschovsky

Abstract

This paper provides an evaluation of the one‐time capital gains exclusion for older homeowners. This provision was largely intended to prevent large capital gains tax liabilities from locking older households into current, and possibly inappropriate, housing. We find the exclusion facilitates a modest number of moves, through not entirely of the downscaling type intended by Congress. Among beneficiaries, the distribution of benefits appears to be highly regressive. Modest benefits are also found to be enjoyed by the real estate and mortgage industries. Revenue losses are estimated and found to be significantly larger than estimates provided by the Treasury Department.

Suggested Citation

  • Sandra Newman & James Reschovsky, 1987. "An Evaluation of the One‐Time Capital Gains Exclusion for Older Homeowners," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 15(1), pages 704-724, March.
    • Handle: RePEc:bla:reesec:v:15:y:1987:i:1:p:704-724
    DOI: 10.1111/1540-6229.00411
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    Cited by:

    1. Cheung, Ron & Cunningham, Chris, 2011. "Who supports portable assessment caps: The role of lock-in, mobility and tax share," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 173-186, May.
    2. J. Sa-Aadu & James D. Shilling & C.F. Sirmans, 1991. "Horizontaland Vertical Inequities in the Capital Gains Taxation of Owner-Occupied Housing," Public Finance Review, , vol. 19(4), pages 477-485, October.
    3. Cunningham, Christopher R. & Engelhardt, Gary V., 2008. "Housing capital-gains taxation and homeowner mobility: Evidence from the Taxpayer Relief Act of 1997," Journal of Urban Economics, Elsevier, vol. 63(3), pages 803-815, May.

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