Tax relief closer for homeowners facing foreclosure
September 27th, 2007, 12:58 pm · 4 Comments · posted by Mathew Padilla, Reporter
A bill that removes tax penalties for homeowners facing foreclosure or who are getting some debt forgiveness from the bank passed its first hurdle, winning approval of the U.S. House Ways and Means Committee, reports National Mortgage News. The bill now goes to the full house for a vote.
The legislation also extends a deduction for mortgage insurance premiums to seven years. Here’s more from the news service:
“Families dealing with the pain of foreclosure should not have the double-whammy of a large tax bill for terminating their mortgage through no fault of their own,” said Rep. Charles B. Rangel, D-N.Y., the committee chairman.
The Bush administration proposed temporary relief from paying taxes on the forgiveness of debt, but the provision in the committee bill (H.R. 3648) is a permanent exclusion.
So far, it does not appear that the White House will oppose the bill. Families with incomes of $100,000 or less who refinanced or purchased a home in 2007 can deduct the cost of their mortgage insurance premium. But this deduction is due to expire at the end of the year.
To learn more about the bill, CLICK HERE.
September 27th, 2007 at 3:02 pm
Foreclosure is the only Best Option.
October 4th, 2007 at 1:01 pm
In the late 1980’s many people with subprime loans walked away from their homes/mortgages. Check the Dallas stats to see what the effects were on housing following the unprecedented bank and S&L failures and decline in market values. The reposession and writedown of property values so they could be sold again caused a tremendous decline in property values of the neighboring properties.
With the additional incentive of not facing taxes on the forgiveness of debt, that is just another incentive to take on a risky mortgage that you can’t pay. Why not, you have everything to gain and nothing to lose.
January 8th, 2008 at 3:02 am
I’ve heard that about 1% of properties in preforeclosure typically go into foreclosure. Does anybody have data showing what the actual percentages were for the LA area in say 1988, 1991,
1995 and 2000?
January 8th, 2008 at 3:16 am
A lot of the psychological well being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company’s financial strength would allow it to buy real-estate-related businesses at bargain prices]….
And, those foreclosure numbers here reflect a county/city of almost 3,600,000 (6th largest in the US)