DeferTax Warns Older Home Sellers of Nonexistent Capital Gains Exemption

DeferTax, a tax deferral consultancy based in Reno, Nevada, has warned that many sellers over 65 are planning around a capital gains exemption that does not exist. According to the firm, a significant number of homeowners believe a rule allowing larger capital gains exclusions for older homeowners is already in place, leading them to make major financial decisions based on this misconception.

Federal law currently allows a seller to exclude up to $250,000 of gain on the sale of a main home, or up to $500,000 for a married couple filing jointly, under section 121 of the Internal Revenue Code. The qualification for this exclusion is based on two tests set out in IRS Topic 701: an ownership test and a use test, each measured over the five years ending on the date of sale. Neither test refers to the seller's age. There is no separate senior exemption, no one-time exclusion for older sellers, and no reduced rate that applies upon reaching 65.

The misconception stems from a once-in-a-lifetime exclusion for sellers over 55 that was replaced by the current provision, which carries no age condition and no lifetime cap on how often it can be used. This means that homeowners who have owned a property for decades in an appreciated market are the most likely to have a gain above the exclusion and also the most likely to assume an age-based provision covers it.

Two bills are currently pending in Congress that would create a larger capital gains exclusion for older homeowners selling a primary residence. H.R. 9064, the Nest Egg Protection Act, was introduced on May 29, 2026, by Representative Nicole Malliotakis of New York. It would temporarily raise the exclusion for qualifying sellers aged 65 or older, subject to a long ownership requirement. Its status is recorded as introduced, with committee consideration still ahead of it.

H.R. 1340, the More Homes on the Market Act, was introduced on February 13, 2025, and would raise the exclusion for all sellers and index it to inflation. Its status is also recorded as introduced, with no major action recorded against it. Both bills remain proposals and are not certain to become law.

DeferTax's President and CEO, Carl Worden, emphasized the importance of planning based on the current law.

The firm's home owner solutions page publishes the routes it uses for that remainder, including a rental conversion and a downsizing approach, each with its own qualifying conditions. DeferTax positions itself as a tax strategist rather than a tax preparer and does not file returns or provide individualized tax advice.

United Tax Group, a separate company, announced effective tax negotiators for clients. Tax negotiators work directly with the IRS so taxpayers do not. The expertise of tax negotiators helps save clients thousands. Tax negotiators from United Tax Group are assigned individual clients, meaning they work on particular cases assigned, thereby providing individualized attention for each case.

In conclusion, DeferTax advises homeowners to review their plans based on the current tax laws and to seek professional advice if they are unsure about their tax obligations. The firm's services are designed to help clients navigate the complexities of tax law and make informed decisions about their financial futures.