---
title: '“$0 Tax On ALL Profits!” - This NEW Housing Market Proposal Is INSANE'
source: 'https://youtube.com/watch?v=Lp85WbbSs8Y'
video_id: 'Lp85WbbSs8Y'
date: 2026-09-22
duration_sec: 953
channel: 'Graham Stephan'
---

# “$0 Tax On ALL Profits!” - This NEW Housing Market Proposal Is INSANE

> Source: [“$0 Tax On ALL Profits!” - This NEW Housing Market Proposal Is INSANE](https://youtube.com/watch?v=Lp85WbbSs8Y)

## Summary

The video discusses a rumored proposal to eliminate capital gains taxes on up to $1 million in profit from real estate sales, potentially including rental properties. The host analyzes the potential impacts on the housing market, the likelihood of passage, and who would benefit or lose.

### Key Points

- **Rumored Proposal** [00:00] — Discussions about an executive order or reconciliation bill to allow homeowners to pay no capital gains taxes on up to $1 million in profit from real estate sales, possibly including rentals.
- **Current Exclusion** [01:26] — Current law allows excluding $250,000-$500,000 in profit from primary residence sales if lived in 2 of last 5 years. These numbers haven't been indexed to inflation since 1997.
- **Example of Tax Impact** [02:19] — A couple buying a home for $400,000 in 2005 and selling for $1.4 million would owe $119,000 in taxes under current law, but zero under the proposed plan.
- **Rental Market Impact** [03:07] — 49 million rental units in the US, half with mortgages under 4% and average $300,000 equity. Many landlords refuse to sell due to low rates and tax implications; proposal could trigger a wave of selling.
- **Historical Precedents** [04:47] — Similar bills like the No Tax on Homesteads Act and the More Homes on the Market Act have been proposed but stalled in Congress.
- **Home Price Effects** [07:26] — 34% of homeowners have gains above $250,000, only 10% above $500,000, concentrated in coastal states. Short-term, more inventory could lower prices.
- **Historical Precedent for Price Drops** [09:29] — Home sales fell 27% in July 2010 after first-time buyer credits expired, suggesting similar effects could occur.
- **Likelihood of Passage** [10:40] — Could pass via budget reconciliation with simple majority, but Republicans are not currently working on tax legislation, and Senate leadership avoids tax code changes. Probability estimated at low single digits.
- **Host's Opinion** [12:47] — Host likes the idea as it indexes gains to inflation, but notes it would mainly benefit wealthy coastal homeowners (average net worth $5.7M). Warns that waiting could lead to losses from price drops exceeding tax savings.

### Conclusion

The proposal is unlikely to pass soon, and even if it did, it would primarily benefit wealthy homeowners. The host advises focusing on building more housing rather than relying on tax changes.

## Transcript

Look at you guys, it's Grant here, and this is unbelievable. Apparently, there are secret, behind-the-scenes discussions that could sooner allow homeowners to pay no capital gains taxes on up to the first million dollars worth of profit when
you sell any kind of real estate. And if you don't believe me, listen to what was just said on the Dave Ramsey Show. Midterms are coming. Now they're actually talking about actually doing an executive order in the next couple
of weeks on the capital gains thing that didn't get put through the first time. So the way you do it is you put it into the reconciliation bill. You don't make it a permanent change to the tax laws. They're talking about moving it to a million. So now you're going, I have a rental property, I have a vacation home, I'm in a big house, but I don't...
Not just personal residence, everything. They're looking at doing that in the next reconciliation bill. I just got a call on that today. Look, all this is to say that if something like this passes, even in a watered-down form, it would have a monumental effect on the entire housing market in all price points for both buyers and sellers.
That is why we got to talk about exactly what something like this would do, the impacts that we would see almost immediately, and then the chances of this actually passing as soon as you hit the like button and subscribe if you haven't done that already.
Because if you don't do that, then Nancy Pelosi is going to come sneak into your house late at night and make you buy Lulu around the stock. So thanks so much, and also a big thank you to Surfshark for sponsoring this video, but more in that later. Alright, so in terms of the housing market and where all of this begins, we need to talk
about the current capital gains exclusion. So here's the thing. Right now, when you sell a primary residence, you can exclude the first $250,000 to $500,000 worth of profit
as long as you've lived in the property for two of the last five years. Sounds nice, right? Well, here's the issue. Those numbers were set by the Taxpayer Relief Act of 1997 and had never been indexed to inflation.
Literally not once in about 30 years, even though home prices since then have just about quadrupled. Like remember, back in 1997, when this was passed, a home clearing $500,000 was pretty uncommon.
But now that's not even the price of the most basic starter home. In fact, if you just index that $500,000 to inflation, beginning back in 1997, guess what? Today that would be worth just over a million dollars.
Tax-free. No joke. To show you how significant this is, Imagine a couple buys a home for $400,000 in 2005, but sells today for $1.4 million. That's a $1 million profit, but they could exclude $500,000 of that and then pay tax on the remaining,
which works out to be $119,000 gone to the federal government in taxes. But under this new concept of a plan, that tax would be zero. However, that is just the very beginning, because if this guy is correct, homeowners could be just the very beginning.
because this would also impact rental problems. But first of all, to be clear, as of right now, this just seems to be a discussion of a concept of a proposal said by one guy on a podcast, which could be in the works.
But if it did happen, this is where we would see the largest impact, on a broad scale. There are currently 49 million rental units in the United States, and half of those hold a mortgage under 4%, with an average of $300,000 worth of equity.
This means there are literally millions of people renting out their property and refusing to sell because they don't want to give up their low interest rate. Plus, if they did sell, they'd have to pay tax on the capital gain.
So what do they do? That's right. They just don't sell. The tenant pays their expenses, and they get to hold on to an asset that hopefully goes up in value over time. Although, this would completely change that.
Again, as of right now, rental properties do not qualify for the capital gains exclusion unless the homeowner has lived there two of the last five years But if that condition is removed and all of a sudden you get the first million dollars of the profit tax I guarantee there would be a wave of selling
as fast as humanly possible because everyone would want to take advantage of this before it goes away. After all, imagine you bought a $400,000 home, now it's worth $800,000, and you make $2,000 a month in profit.
Well, if you were to sell, you would pay $80,000 worth of taxing again, which then wipes out the last 40 months of rent. But now that those capital gains taxes are removed, then suddenly the person essentially receives an extra 40 months worth of rent for selling,
not including depreciation recapture on the property. And the result is that a lot more people would sell, a lot more inventory is going to flood back onto the markets, and in theory, value should decline.
Oh, and by the way, this is not just a Trump idea either. Similar concepts have been floated around in the past, including the No Tax on Homesteads Act that would eliminate dollar caps entirely for a primary residence, or the bipartisan More Homes on the Market Act, which would double the limit to a million dollars and index all gains to inflation going forward.
Although both acts so far stalled in Congress. That's why we've really got to talk about exactly how something like this could become law. The likelihood of something like this passing, even in a watered-down version, and then the impact on everyone watching.
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They also have a money back 30 day guarantee. So you can give it a shot and see what you think. Again, that link is down below with the code Graham. Thank you so much. And now let's get back to the video. All right. So in terms of whether or not a capital gains exclusion actually has a chance of passing
through and the impact this would have on the entire market, we need to talk about home prices. First of all, it's important to mention that according to the National Association of Realtors, 34% of homeowners have gains above $250,000 and only 10% of homeowners have gains above
$500,000, which are mostly concentrated, by the way, in coastal states. We talking California Washington Massachusetts Hawaii and Washington D This means that short term most homes that would be unlocked from this are generally going to be more expensive homes in coastal cities since the majority of houses out there
still fall under the current capital gains exclusion limit. Now, in terms of rentals, though, this is where things get really interesting. Currently, there are more than 49 million rental units in the United States,
and it's just 3% of them left because of this proposal. That would equate to roughly 1.5 million housing units flooding onto the market, increasing supply by roughly 25% to
35%, especially in markets like Las Vegas, Phoenix, Tampa, Atlanta, and Dallas, where there happens to be a lot more investor activity. As a result, once inventory begins to outpace the number of buyers in the market, homes
should begin to come down in price, which in some markets has already begun to happen. That is why short-term, we could see more inventory, more competition between sellers, and lower prices for buyers,
since the sellers might be more likely to cut their price since they're saving on the tax. However, in terms of the long-term impact, it really just depends on if this is temporary or permanent. If this is temporary, again, first year, we see a wave of selling and much lower prices.
Second year, home prices begin to find a floor and stabilize. And then from there, as this begins to expire, we'll get all the homeowners who were thinking about selling finally listing their property, all at the same time flooding the market with more inventory, and we should see a national home price decline when that happens.
And this isn't just random either. As proof of this, home sales fell about 27% in July of 2010, three months after the first time buyer credits expired. So this is not exactly rocket science.
So who wins here? Well, it's really the homeowners with a lot of equity who are thinking about selling, and also buyers who want more to pick from and maybe slightly lower prices. And in terms of who loses, it's really the existing homeowners who don't have much of a gain, who are forced to sell into a market with a lot more inventory that's suppressing prices.
I mean, imagine, you have a house, you don't have much of a gain, and then you have to compete with everyone else who's just saving money on taxes. And then, oddly enough, renters may have a harder time, because not only is there probably going to be more rental competition
when people sell and choose to rent instead, but also if people were becoming a landlord and renting out their properties, and now they decided they wanted to exit the game entirely, well, that's less rental inventory on the market.
So rental prices, if anything, might actually go higher. Obviously, this all depends on a million different things and all the details that we just don't have. But in terms of whether or not this is even likely to go through at some point in the future,
we've got to talk about midterm elections. Theoretically, yes, this could pass without needing 60 votes in the Senate, all thanks to what's called budget reconciliation. Basically, this is a special process Congress could use for legislation involving taxes, spending, and the federal budget.
It allows things to pass through with a simple majority, as long as it doesn't add more than a certain amount to the national deficit. In fact, this is exactly how the big beautiful bill went through last year without any Democrats voting for it.
Now, the catch is, of course, that anything that adds to the national deficit over 10 years gets thrown out. And this is why the prior no tax on tips, no tax on overtime, all of it expires after 2028.
So if this did go through, it would probably all just be temporary, like everything else. However, here is a bit of a problem. Republicans are currently working on the third reconciliation bill so far, and there is no mention of anything involving taxes.
On top of that, Senate leadership has openly said that they do not want to touch the tax code, because if they did, then Democrats would force a vote on Medicaid and Obamacare subsidies right before an election.
Separately midterms are just over a month away most of Congress has gone to the month of October and the big beautiful bill took five months to go through If I had to put a chance of this happening I put it in the low single digits
and that's me being very generous here. That is why, realistically, the no tax on home sales might just become a campaign promise for the future, or the bipartisan More Homes in the Market Act, which already has 170 co-sponsors,
It gets attached to this somehow, and it gets passed through, but I don't see that happening. But if it did, this legislation would actually make it permanent. Oh, and as far as this also applying to investment properties, as of right now, there's nothing in Congress whatsoever that talks about this becoming a reality.
Not even talks of it, nada. That part is this one guy on the podcast talking about who knows what. Plus, even if the odds are extremely low, by the time something like this were to pass,
if it did, planning ahead for it would most likely also be too late. So, in terms of where I stand, here's what you came for. Overall, not a surprise. I actually like extending the capital gains exclusion to a million dollars.
To me, it just indexes the gain to inflation like it should have been from 1997, and it would incentivize a lot more people to sell. Sure, you could argue that homeowners will have more money left over after the sale
to then roll over into the next one, kind of neutralizing the benefits. But I would say a lot of people selling are probably empty nesters, and they're going to be selling, downsizing, and funding retirement instead.
They're not just going to be trading laterally or moving up. I think a lot of them are going to downsize. And in doing so, I think it's going to free up a lot of inventory that would be great for first-time homebuyers or starting families. Except for for that, if this were to pass, we need to be realistic about who this is going to help.
According to Yale, only 10% of homeowners have gains above the current limit, and the average net worth of those homeowners is roughly $5.7 million. So this is probably not going to be a middle-class tax credit by any means.
It's going to really benefit rich people in coastal cities where real estate tends to be pretty expensive. That is why, yes, this would help to add more inventory onto the market, but I just don't see it as a long-term solution.
Not to mention, there is also the chance that home prices end up falling more from increased inventory than someone would end up paying just in the tax. Like, just do the math here. If a married couple has a $700,000 gain, which is $200,000 over the limit, worst case, that's about $47,000 in tax.
But if home prices fall 5% while they're waiting on a $1.2 million home, that's $60,000 lost. So you'd lose more after more inventory comes on the market than you would have had just selling now.
To me, the only solution here is to encourage more building. And maybe someday we could get AI robots doing it for a fraction of the price to bring down the cost. But until then, we are likely going to see more of the same.
and at most I have a feeling this is going to be a promise for the future that I'll have a very unlikely chance of actually passing through. Unless, of course, you hit the like button and subscribe if you haven't done that already.
So thank you so much and also I just want to mention for anybody interested, a little over a year ago I set up a networking group for entrepreneurs, business owners, and investors to be able to like meet up and talk, shop, so to speak,
and we ended up getting thousands of applications and the initial group was only like a few dozen people. So everyone else is kind of off to the side, but we're now expanding and we're taking on a few additional applications.
So if that sounds like something that's of interest to you, that link is down below in the description to apply. Again, it's really for like entrepreneurs, business owners, investors. So again, that link is down below to apply
and we'll do our best to get through as many people as we can. But yeah, it's open a few extra spots. Thank you so much and until next time.