WHAT IS THE PRIMARY RESIDENCE CAPITAL GAINS TAX EXCLUSION?

The current tax law provides a valuable exclusion for homeowners on the sale of their primary residence (subject to a host of requirements to qualify for the exclusion). Individuals who do qualify can exclude up to $250,000 of gain, while married couples filing jointly can exclude $500,000.

A second, albeit somewhat sarcastic, question: remember when $500,000 used to mean something? I ask that because the law, as it exists today, is overdue for a reality check.

Let’s rewind to 1997. Bill Clinton was in office, Titanic and Jurassic Park ruled the box office, AOL was how we logged onto the internet, and Congress passed a shiny new tax law that felt generous—at the time. The law included the current exclusion amounts mentioned above.

The intent was two-fold:

First, the prior law provided a rollover of your basis from one primary residence to another, which allowed taxpayers to avoid any capital gains tax whatsoever until they stopped rolling their gain into a new primary residence. It was administratively impractical for homeowners to keep track of and hold onto records relating to capital improvements—especially with one or more rollovers—so the new exemptions were meant to alleviate that burden by simply covering most scenarios.

Second, most homeowners weren’t raking in massive profits on their home sales (certainly not more than $500,000!), and this exclusion meant they could sell without handing over a chunk of their retirement to the government.

Fast forward nearly three decades, and the market has moved drastically—but the law hasn’t. In New York, we experienced incredible increases in value leading up to the credit crisis in 2008 and then again in the next super-hot cycle that ended in 2016. Post-COVID, other parts of the U.S. have experienced massive housing inflation. The median sale price of a home in the U.S. in 2000 was $119,600—and today it is $416,900, a nearly 250% increase!

Here’s the hitch (or glitch): the exclusion hasn’t been indexed for inflation like many tax laws, including the federal estate tax exemption. $500,000 in 1997 dollars would be equivalent to around $1,000,000 today. So that “tax relief” that used to cover nearly all capital gains for most homeowners? It now covers far less—and it’s shrinking every year because of inflation.

The result: homeowners who followed the rules, lived in their property, and built wealth the traditional way—over time—are finding themselves stuck with capital gains tax bills they never anticipated. It's especially painful in markets like ours, where long-term appreciation is the norm, not the exception.

A second result, which is directly contributing to the housing shortage in our country, is that some senior homeowners are not moving because the tax “penalty” is just too large, making it economically unfeasible to sell and move (and use their well-earned equity to live comfortably). Is a widowed retiree making a $500,000 profit on the sale of their long-term home to fund their final years considered “rich”? Some would say so.

There’s growing chatter in Washington about adjusting the law. The More Homes on the Market Act, a bipartisan proposal, would increase the exclusion to $500,000 for individuals and $1 million for couples. It would also finally index the exemption for inflation, which would be a game changer in cities like New York. While nothing has passed yet, the fact that this conversation is gaining traction suggests that lawmakers may finally be tuning in to the real math behind long-term homeownership.

For now, the best advice is to know your numbers. Timing, smart financial planning, and having the right team in place can make a huge difference. Real estate has always been one of the most reliable ways to build wealth—but the rules around that wealth are constantly changing. If you’re thinking about selling your primary residence, let’s talk strategy—I am always here to assist you in every way possible!

Have a humidity-exempt weekend finally!

Best, Michael

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Local News

An immersive floral fantasy has taken over ARTECHOUSE in Chelsea

Experience beautiful flowers and butterflies—without having to actually go outside.

This summer in New York City, experience the unbelievable beauty of nature, without actually having to go outside. Head over to ARTECHOUSE in Chelsea Market now until Labor Day and immerse yourself in a new botanically inspired multi-sensory exhibition, "Blooming Wonders." This pixelated ever-moving landscape featuring psychedelic pink daises, fluttering butterflies, and some abstract surprises is accompanied by calming, dreamlike ambient music.

The new 40-minute experience lets you hang out inside the 270-degree, floor-to-ceiling 18K-resolution digital canvas inside the historic market's 100-year-old boiler room, while experiencing the fleeting beauty of spring and summer blooms come to life with immersive, interactive technology.

General admission tickets start at $24.50. For children, ages 15 and under, tickets are $18 for time-slots before 6 pm. Discounted rates are also available for students, seniors, military, first responders, and small groups of 4-9 people. Tickets are available online here and on site at the venue.

Bloom into wonder! NYC’s dreamiest garden is indoors — and it's waiting for you. 🌸 Click below to explore!

More Info: CLICK HERE

Is this ‘Phantom of the Opera’ revival the new

‘Sleep No More’?

A new immersive show is opening in Manhattan later this month, and it’s already sold out its first six weeks.

“Masquerade” is an Andrew Lloyd Webber-approved take on “The Phantom of the Opera,” staged in a four-story French Renaissance Revival-style landmarked building at 218 West 57th St. in Midtown.

The show will feature some former cast members from “Phantom of the Opera,” which shuttered after a record-breaking 35-year run in 2023. The Broadway sensation tells the story of a disfigured composer who lives beneath the Paris Opera House.

Previews start on July 31, and what was originally set to be a six-week run was extended through mid-October after the first batch of tickets, which are selling for more than $200 a pop, sold out in hours on June 30.

No stage. No distance. Just pure Phantom, reimagined. 🎭 NYC’s new immersive hit is here—click below to see more!

More Info: CLICK HERE

Michelin Just Added 14 New NYC

Restaurants To Its Prestigious Guide–Here’s

The Full List

The 14 new additions are just a fraction of the hundreds of NYC restaurants that are recommended by Michelin Guide Inspectors!

New York City has long earned its reputation as one of the world’s ultimate foodie capitals–and no, it’s not just us saying that. So it’s only natural that NYC and the Michelin Guide are basically besties, with new restaurants constantly scoring a spot on the coveted list.

The Michelin Guide Inspectors just spent the last year on the road uncovering the best restaurants to recommend, as they often do, and 14 New York City restaurants fed them meals too good to keep a secret. Lucky for us, those spots have found their way onto the New York Guide, thus giving us a sneak peek at the 2025 iteration!

NYC’s dining scene just got hotter—see which spots made the Michelin cut this month. 🍽️ Click below for the flavor!

More Info: CLICK HERE

84 6th Avenue, Apt. 1

2 Bed | 2.5 Bath | 6 Rooms | Condo

Park Slope | C.C.'s: $885/mo

Now offered at: $2,150,000

Welcome to 84 6th Avenue, an exquisite two-bedroom, two-and-a-half-bathroom duplex condominium where timeless Brooklyn architecture meets thoughtful, high-end renovation. Nestled within a beautifully restored 1884 Neo-Grec brownstone in the Park Slope Historic District, this nearly 1,700-square-foot home offers an extraordinary combination of indoor comfort and rare private outdoor space.

Meticulous design choices abound—from the wide-plank white oak floors and soaring ceilings to the Pella windows and custom millwork that elevate every room. The open-concept great room is both welcoming and functional, anchored by a bespoke chef’s kitchen featuring custom oak cabinetry and a full suite of Bertazzoni appliances. Whether entertaining or unwinding, the seamless transition to the 734-square-foot private yard—with its mature trees, elegant fencing, and generous patio—is an undeniable highlight.

The king-size primary suite is a true sanctuary, offering two closets and a serene en suite bath clad in floor-to-ceiling statuary marble, complete with a walk-in rain shower and refined brushed nickel fixtures. A well-proportioned second bedroom and beautifully appointed guest bath with a soaking tub round out the main level.

On the lower floor, a sprawling recreation space adapts easily to your lifestyle—as a media room, playroom, office, or third bedroom—complemented by a chic powder room, full-size washer and dryer, and custom dry bar with wine fridge.

Residents of this boutique brownstone enjoy modern conveniences including central HVAC, a ButterflyMX virtual doorman system, and private storage, all while being moments from Prospect Park, Grand Army Plaza, and Park Slope’s best dining, shopping, and cultural destinations. With convenient access to multiple subway lines and the LIRR, the entire city is at your doorstep.

This is brownstone Brooklyn living at its most refined, classic, curated, and completely turnkey.

See listing website: CLICK HERE

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Michael J. Franco

Lic. Assoc. R.E. Broker

M: 917.817.4122

mfranco@compass.com

Office: 646-982-0353

Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. All Coming Soon listings in NYC are simultaneously syndicated to the REBNY RLS. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.