Trump says he's considering a new tax break. Here's how it could impact the housing market.
Trump said July 22 that his administration is considering eliminating capital gains taxes that are levied when a home is sold for more than the previous purchase price.
'We are thinking about no tax on capital gains on houses,' Trump said during an Oval Office meeting with the president of the Philippines.
Trump, a wealthy real estate developer who has extensive property holdings, didn't go into details about his proposal, and the White House didn't immediately respond to questions.
Trump on July 4 signed a measure that extends his 2017 tax cuts and includes new tax breaks, including on tipped wages, overtime pay and car loans. The law also slashes spending on the Medicaid health insurance program for lower income Americans and lifts the nation's looming debt ceiling. The measure is expected to increase the federal debt by $3.4 trillion over 10 years, according to the Congressional Budget Office.
Trump can't turn his suggestion for the housing market into reality by himself: cutting the tax on home sales would require additional legislation. The move also comes as the president has long pushed Federal Reserve Chair Jerome Powell to lower interest rates.
"If the Fed would lower rates, we wouldn't have to do that," Trump said of the potential home sales tax cut.
In general, the Fed cuts interest rates to stimulate a flagging economy and job market. It increases interest rates – or keeps them higher for longer – to lower inflation or prevent a spike in prices.
Powell warned in April about the impact of Trump's tariffs on inflation, telling the Economic Club of Chicago that "Unemployment is likely to go up as the economy slows, in all likelihood, and inflation is likely to go up as tariffs find their way and some part of those tariffs come to be paid by the public."
Contributing: Paul Davidson
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