TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Friday, August 31, 2007

Bush Proposes Tax Relief for Homeowners in Foreclosure

Last week, I blogged the tax aspect of the sub-prime mortgage problem:  taxpayers often have discharge of indebtedness income upon foreclosure of their homes.  The post included detailed commentary by Tax Profs Bryan Camp (Texas Tech), Sheldon Cohen (Farr, Miller & Washington; former IRS Commissioner), Linda Galler (Hofstra), Stuart Lazar (Tulane), Jim Maule (Villanova), Marty McMahon (Florida), and David Shakow (Penn).

President Bush today announced his suppport for a proposed amendment to ยง 108 to provide relief from discharge of indebtedness income for taxpayers who lose their primary residences to foreclosure.  The Mortgage Cancellation Relief Act pf 2007 (H.R. 1876; S. 1394).  From the White House Fact Sheet:  New Steps to Help Homeowners Avoid Foreclosure:

The President Calls On Congress To Change A Key Housing Provision Of The Federal Tax Code So It Does Not Punish Families Who Are Forced To Sell Their Homes For Less Than Their Mortgage Is Worth. Current tax law counts cancelled mortgage debt on primary residences as taxable income. For example, if the value of a home declines and $20,000 of the homeowner's loan is forgiven, the tax code treats that $20,000 as taxable income. The President proposes temporary relief to ensure that cancelled mortgage debt on a primary residence is not counted as income.

  • The President Is Working With Congress In A Bipartisan Fashion To Make This Important Change. Senator Debbie Stabenow (D-MI), along with Senator George Voinovich (R-OH) and others, has introduced a bipartisan bill that would protect homeowners from having to pay taxes on cancelled mortgage debt. In the House, Representatives Rob Andrews (D-NJ) and Ron Lewis (R-KY), along with several of their colleagues, have introduced similar legislation. The President looks forward to working with Congress to reach agreement on a bill, so we can deliver this vital tax relief to American homeowners.

http://taxprof.typepad.com/taxprof_blog/2007/08/bush-proposes-t.html

News | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef00e54ed56bd18833

Listed below are links to weblogs that reference Bush Proposes Tax Relief for Homeowners in Foreclosure:

» BUSH PROPOSES HAIR 'O THE DOG FOR HOUSING BUBBLE HANGOVER from Roth & Company, P.C.
The nation wakes up from it's easy housing credit binge, and its head hurts. Now that the housing market is... [Read More]

Tracked on Aug 31, 2007 5:28:19 PM

Comments

What can we do to fight this?

Posted by: James Davidian | Sep 3, 2007 8:01:39 PM

Aiyiyiy! I have supported this guy's policies when they were not so popular with the majority. Now, I as completely disgusted with him.
The Feds have done nothing to stop or go after all the rampant mortgage fraud. At least the tax code - 1099C - could penalize those greedy flippers and goldminers who were gaming the system and got caught when the game ended.
He is actually just as dumb as he appears.

Posted by: taxpayer2 | Sep 3, 2007 10:14:40 PM

how long will this take to go into affect, cause im up against the wall with this one i'm real close to foreclosure and it is my primary residence ??

Posted by: albert | Sep 4, 2007 9:19:58 PM