Nearly 30-Year-Old Capital Gains Tax Exemption Rules Blamed for US Housing Shortage

Many homeowners avoid selling because of high capital gains taxes, prompting real estate professionals to call for changes.

The expansive penthouse terrace of a 4-bedroom, 4.5 bath, 3,619 SF condo in Greenwich Village, Manhattan, listed at $11.9 million. Courtesy of Nest Seekers International, NYC

With median home prices exceeding $1 million in many U.S. housing markets, some real estate professionals are drawing attention to a 28-year-old capital gains tax law, citing it as one factor contributing to the nationwide housing shortage.

A recent report from Realtor.com shows that California is home to 8 of the 10 most expensive housing markets in the United States. San Jose tops the list with a median sales price of $2.02 million, followed by Anaheim and San Francisco at $1.45 million and $1.32 million, respectively.