Trump Mulls Removing Capital-Gains Tax on Home Sales. The Aim Is to Juice the Housing Market.

It’s shaping up to be another slow year for housing, with both buyers and sellers hesitant to move. (Mario Tama/Getty Images)

President Donald Trump on Wednesday said the administration was weighing whether to exempt home sales from capital-gains taxes. That could loosen a constricted housing market, according to the bill the president was referencing.

It’s shaping up to be another slow year for housing, with both buyers and sellers hesitant to move. The significant cost of purchasing a home is weighing on many buyers, particularly first-timers. Homeowners, meanwhile, have little incentive to list their homes, particularly as mortgage rates and home prices remain relatively high and supply relatively low.

Republican lawmakers have taxes on home sales in their sights. “We are thinking about no tax on capital gains on houses,” Trump said Tuesday during an unrelated press conference with Philippines President Ferdinand Marcos Jr., Jr. The comment was a nod to Rep. Marjorie Taylor Greene (R., Ga.), who introduced the No Tax on Home Sales Act earlier this month.

Homeowners already can exclude some capital gains from the sale of a primary residence from their income, either $250,000, or $500,000 if filing jointly, according to the IRS.

That exclusion doesn’t go as far as it may have in the past, according to the bill’s author. “As home prices have risen, more middle-class homeowners are being hit with capital-gains taxes that were originally intended for wealthy investors,” according to a press release announcing the bill.

According to the release, the bill would increase home supply by removing a barrier to selling, benefiting both buyers and sellers.

It isn’t the first time Trump has referenced the proposal. He said the bill “could be a very big positive” earlier this month, Realtor.com and others reported last week.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com