The Trump administration floats a capital gains tax cut for primary residence sales. Floats it right before midterms. What a coincidence. What an absolutely stunning coincidence that tax policy suddenly becomes generous when votes need counting.
Here's the thing about homeowners. They already get a $250,000 capital gains exclusion if they're single. $500,000 if they're married. You can sell your house, pocket half a million tax-free, and the IRS just waves goodbye like you're heading off to summer camp. But apparently that's not enough. Apparently we need more.
Retail traders hear "capital gains tax cut" and immediately start Zillow-searching neighborhoods they can't afford. They're running calculations on houses they don't own. They're texting their landlords asking if now's a good time to buy. Their landlords are not texting back.
The beautiful part is timing. You want to juice the housing market? You announce tax cuts. You want to win elections? You announce tax cuts. You want to do both while pretending it's about economic policy? You float the idea to reporters and let them write the headlines for you.
This is the same market where people convinced themselves their 1,400 square foot ranch in Phoenix was worth $780,000 because some app told them so. Now they get to imagine selling it tax-free like they're running a charity for their own retirement account.
None of this changes the chart. None of this changes the trend. None of this makes your technical setup any less doomed. But it does make for a nice story. A nice story about how the government cares about you, specifically you, the homeowner who definitely votes and definitely remembers who gave them a tax break.
The midterms are in November. The trial balloon is in August. The math is not complicated, but somehow retail will still find a way to f*ck it up.
Photo by Gabriel Tovar on Unsplash
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