For many homeowners in Arkansas, selling their property today could trigger a costly and unexpected tax bill. A federal capital gains rule that hasn’t been updated in more than 25 years is quietly turning home appreciation into a liability—and it’s catching many longtime Arkansans off guard.
According to a new National Association of REALTORS® report, 11.5% of Arkansas homeowners have gained enough equity to exceed the $250,000 federal capital gains exclusion limit for single filers.
Meanwhile, 1.37% have already surpassed the $500,000 limit for joint filers. In a state where housing affordability has long been a draw, these high exposure rates underscore just how much values have grown—and how outdated the tax thresholds have become.
A federal rule that hasn’t kept up
Under current law, homeowners can exclude up to $250,000 in profit when selling a primary residence—or $500,000 for married couples. The policy was established in 1997 to simplify tax reporting and protect most middle-class sellers. But since then, home prices have surged more than 260% across the country. The exclusion limits, however, haven’t moved an inch…