New Tax Changes Proposed by the House Ways & Means Committee (Introduction by Janet Bergeron)

There's a bill that was just put forth unanimously from the committee which takes away the tax exclusion of living in a house for two of the past five years, if it was a rental or vacation home.

There is some very minimal grandfathering, more of use to people getting out of the rental business sooner rather than those of us who want to hold. The whole banking industry is behind this bill: it's the one that relives people in foreclosure of their tax on debt relief - very popular right now. It will take lots of folks speaking up, but so far, all I've heard is silence in the press. You have a way of getting the word out. Some of the bill information is available at http://waysandmeans.house.gov.

Also, if it would be a concern that some landlords are in foreclosure, this doesn't have to be an either or. A bill can be written that eliminates tax on forgiven debt and does not take away the tax exclusion that so many landlords need when selling a house they have lived in & rented. But... the word has to get out. People's retirement savings is on the line!

House Committee on Ways and Means

For Immediate Release: Thursday, October 4, 2007

Contact: Matthew Beck or J. Jioni Palmer (202) 225-8933

Housing Tax Relief Bill Passes Full House Legislation would prevent families from receiving tax bill following mortgage foreclosure WASHINGTON – The House of Representatives gave overwhelming bipartisan support to H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007, today in response to some of the tax issues that have arisen as a result of problems in the subprime mortgage market. The measure passed the full House 386 to 27. Similar legislation is pending before the U.S. Senate. Under current law, debt forgiven following mortgage foreclosure or renegotiation is considered income for tax purposes, resulting in tax liability for individuals and families. The House bill, written by Ways and Means Committee Chairman Charles B. Rangel (D-NY), would provide tax relief to families by permanently excluding debt forgiven under these circumstances from tax liability. It is estimated that two million American families could lose their homes to foreclosure due to rising interest rates in the current housing market crisis. "I am happy that Congress came together to give bipartisan support for this common sense bill to help alleviate the pressure American families are feeling due to the subprime mortgage crisis," said Ways and Means Committee Chairman Charles B. Rangel. "It is just not right or fair that families struggling through a foreclosure would then face a tax bill in addition to losing their homes when they have seen no increase in their net worth. This bill rights that wrong and provides tax relief to millions of American families." The bill would also help would-be homeowners secure their investments and avoid high interest, "piggy-back" loans for down payments through a long-term extension of the tax deduction for mortgage insurance while also easing restrictions for qualifying as housing cooperative corporations. Finally, the bipartisan bill would tighten requirements taxpayers must meet to exclude gain from the sale of certain homes that have been used as a vacation home or rental property. H.R. 3648 has received strong support from the housing and mortgage industries, including the National Association of Realtors, Mortgage Bankers Association and National Association of Homebuilders. Please click here to view a summary of the legislation and letters of support for H.R. 3648. Click here to view Ways and Means Members Support for Housing Tax Relief Bill.