Could a capital gains moratorium financially motivate owners to sell? 

The housing supply has fallen to a historic low. Builders have not been able to keep pace with demand, resale stock is in short supply due to many social and economic factors, and the demand for housing from the millennial generation continues, with a younger generation of Zoomers right behind them. Affordability at all levels remains a challenge, the diversity of housing stock as means of allowing greater affordability continues to be a problem, and public officials are searching for answers in zoning, construction, tax credits, and repurposing of commercial office space as a means to boost supply and affordability. All of these efforts are important, but there may be yet another means of restoring harmony and balance to this supply equation. What we are proposing is a moratorium of two years at the federal level on the capital gains tax for real estate as a possible means for increasing supply, easing demand, offering more opportunity and selection, and just perhaps, returning appreciation to a more acceptable norm. The Boomer generation is one of the wealthiest, and has a lot of investment property, much of which falls into the affordable housing range, under $1.2 million in urban and metro areas. Many (not all) are hanging onto this property because of the 15% capital gains tax at the federal level, combined with the 5% capital gains tax at the state level, and a depreciation tax on top of this, making selling too expensive and egregious. By having a finite period of two years in which to financially motivate these individuals to sell, the housing market could be made to resemble a four- to five-month supply and force the market to return to some level of normalcy. This solution, however, must be implemented with considerable care and oversite so as to avoid flooding the marketplace and causing another housing recession. At each four-month interval during the two years, the program would be reassessed for its efficacy. The parameters would be re-evaluated to ensure they are not producing a deluge of homes coming to market nor a shortage. The numbers could be adjusted up or down, or not at all, based on what the national housing data is showing. The program could be regulated by the Department of Housing and Urban Development, which would have the right to change the parameters if the program needs to be accelerated or decelerated based on the number of homes coming to market or languishing on the market; it could do so by issuing a change at the end of each fourth month cycle. Because real estate is hyperlocal, each state would have the right to end participation at the end of each six-month interval during the two-year moratorium. 

Source: Guest Opinion, WRE News