The House measure he's referring to is the Mortgage Cancelation Relief Act, H.R. 1876. As it stands, the IRS sees everything as income, so when your lender says, "You know what, the home I financed wasn't worth $400K, it was worth $350K, so I'll lower your mortgage amount (and thus your payment)," the IRS sees this as your having made $50K. Goodbye high mortgage payment, hello crushing additional tax burden. The House fixed that by simply excluding these write-downs from the definition of "income."Second, Congress needs to temporarily reform the tax code to help homeowners refinance during this time of housing market stress. Under current law, if the value of your house declines and your bank forgives a portion of your mortgage, the tax code treats the amount forgiven as taxable income. When you're worried about making your payments, higher taxes are the last thing you need. The House agrees and recently passed this relief with bipartisan support. Yet the Senate has not responded. This simple reform could help many American homeowners in an hour of need and the Senate should pass it as soon as possible.
Changing the tax code can also help state and local government do their part to help homeowners. Under current law, cities and states can issue tax-exempt bonds to finance new mortgages for first-time home buyers. My administration has proposed allowing cities and states to issue these tax-exempt mortgage bonds for an additional purpose: to refinance existing loans. This temporary measure would make it easier for state housing authorities to help troubled borrowers — and Congress should approve it quickly.- POTUS, Dec. 6, 2007
This bill is not yet law. The Senate has "read it" and sent it to Committee. I have to imagine they are fast tracking it. This may do more good in 1-2 sentences than the whole of HOPE NOW.
No comments:
Post a Comment