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High capital gains taxes on home sales are preventing many older Americans from downsizing, exacerbating housing shortages. A couple, Joel and Kathryn Friedman, are delaying selling their $4.5 million California home due to this tax. President Trump is considering eliminating the tax, a move supported by some Republicans and Democrats. While this could increase housing inventory, economists have concerns about potential inflationary pressures and unintended consequences. The current tax disproportionately impacts higher-income homeowners and would cost the government significant revenue.

Prepared by Christopher Adams and reviewed by editorial team.