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Capital-gains cut unveiled
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August 29, 1996: 9:10 p.m. ET
Clinton: Cut will let most homeowners skip taxes when they sell
From Correspondent Kelli Arena
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WASHINGTON (CNNfn) -- President Clinton on Thursday proposed raising the ceiling on how much profit someone selling a home can pocket before they have to pay taxes on the capital gains.
His proposal would allow families to avoid taxes on as much as $500,000 in capital gains when they sell a house.
For single homeowners, the limit drops by 50 percent to $250,000.
Financial planners say that under the current system, many homeowners -- especially retirees -- feel trapped.
A lot of them want to move into smaller or less expensive homes and use the profit they've made doing so for other expenses.
But experts say that because of the heavy capital-gains tax, many people in such a situation can't benefit from selling their homes.
John Tuccillo of the National Association of Realtors said that under the new plan, that will change. (119K WAV) or (119K AIFF)
Experts say Clinton's proposal merely represents a recognition of what inflation has done to the housing market over the last 25 years.
They add that Clinton's plan would most help Americans living on the nation's East and West coasts.
"This would generally benefit the people who live on both coasts, who have had the biggest runup in home values -- as well as people who have had their houses for a long period of time," tax expert Thomas Ochsenschlager said.
Yet analysts say adding the new proposal to the federal tax code's existing mortgage interest-rate deduction translates into a good deal for almost all homeowners.
And observers note that even if President Clinton doesn't win re-election, Americans stand to get some degree of tax relief.
Republican Bob Dole has said he also wants to cut the capital-gains tax, although not as much as Clinton.
Either way, homeowners will apparently come out winners.
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