NAR to Congress: Make Debt Cancellation Relief Permanent
The epidemic of underwater mortgages from the financial crisis a decade ago is largely over, but some 2.5 million homeowners remain underwater and many face disastrous consequences if Congress fails to extend tax help for those who’ve had mortgage debt forgiven, a REALTOR® told the House Ways & Means Committee today.
Barry Grooms, broker of Sara Bay Real Estate in Sarasota, Fla., said many homeowners who have fallen behind on their mortgage payments are absorbing a double hit in their finances and home equity, often through no fault of their own. “As a REALTOR® over the past 18 years, I saw firsthand many times what can happen when a family is double-struck with a financial catastrophe that hits when they have negative equity,” Grooms said in his testimony.
Rep. Vern Buchanan (R-Fla.), chairman of the U.S. House Ways and Means Subcommittee on Tax Policy, speaking with Barry Grooms during a break in today's hearing.
In the hearing, the tax-writing Ways & Means Committee sought to examine a number of tax provisions that require extensions each year. Without the extension of tax relief for homeowners who’ve had some of their mortgage debt forgiven by their lender, the IRS counts the forgiven debt as income, potentially increasing the tax burden on households that are already struggling financially. NAR has requested the permanent extension of tax relief on forgiven mortgage debt in the past, a sentiment echoed by Grooms today.
Grooms pointed out that Congress has made permanent a tax exclusion on capital gains of up to $500,000 on the sale of a home, but only extended the tax break on forgiven mortgage debt on a temporary basis.
“If this provision is allowed to expire, we are left with a tax policy that rewards good fortune but piles on when the tables are turned,” he said. “This is neither fair nor smart.”
—Robert Freedman, REALTOR® Magazine