Eminent Domain Tax Relief Act of 2005

The Eminent Domain Tax Relief Act of 2005 (H.R. 3268) proposes to change the federal tax code so that property owners do not have to pay income tax on profits gained when their property is taken by the government through eminent domain. Under current law, if a government entity compensates a citizen for seized property at a value higher than what the owner originally paid, that "gain" is typically subject to capital gains tax. This bill would exempt those specific payments from being counted as taxable income, allowing affected individuals and businesses to keep the full amount of their compensation.