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SB 139

Income tax, state; subtraction for long-term capital gains from sale of principal residence.

2026 Regular Session Introduced by Jeremy McPike

SB 139 excludes long-term capital gains from principal residence sales from Virginia state income tax, reducing taxes on homeowners but decreasing state revenue.

Continued to next session in Finance and Appropriations (13-Y 0-N)
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Bill Summary · SB 139

Legislative bill overview

SB 139 proposes to allow Virginia taxpayers to exclude long-term capital gains from the sale of their principal residence from state income taxation. This creates a state-level tax deduction specifically for home sale profits that meet long-term holding requirements, similar to existing federal tax exclusions but operating at the state level.

Why is this important

Virginia currently taxes capital gains as ordinary income, making home sales potentially subject to state tax liability. This bill would reduce tax burden on homeowners selling their primary residences, particularly affecting middle-to-upper income earners in appreciating real estate markets. The fiscal impact statement suggests measurable revenue implications for the state budget.

Potential points of contention

  • Revenue loss: The bill reduces state tax collections from a major source (property sales), requiring either spending cuts or alternative revenue sources
  • Equity concerns: Benefits primarily accrue to homeowners in appreciating markets; renters and those unable to build home equity receive no benefit
  • Income targeting: Without income caps, high-value home sales by wealthy individuals receive the same tax benefit as modest home sales, raising questions about tax progressivity
  • Economic effects: May artificially stimulate housing market activity or create incentives for timing home sales around tax years

Compiled from official sources — confirm details with the bill’s official record.

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