Silicon Valley Realtors praised the passage by the U.S. House of Representatives of H.R. 3648, better known as the Mortgage Cancellation Tax Relief Act. This legislation, which passed the House by a vote of 386 to 27, aims to provide tax relief in situations where debt is forgiven because of a decrease in home value or because of the financial hardship on the borrower.
Under current law, forgiven mortgage debt is treated as taxable income and taxed at ordinary income rates. H.R. 3648, as amended by the House Ways and Means and Rules Committees, would provide a permanent exclusion forgiving mortgage debt on a principal residence, up to $2 million. There is no income restriction on those who are eligible for the relief. H.R. 3648 has a provision to safeguard against abuses. That provision is similar to one that already exists for commercial real estate owners and would treat commercial and residential property equally.
The National Association of REALTORS® (NAR) and the California Association of REALTORS® (C.A.R.) hailed the passage of H.R. 3648 . Since the early 1990s, NAR has advocated for repeal of the current law, which forces individuals to pay an income tax when they have had a loan forgiven, or have had to foreclose because of their inability to pay their mortgage.
"Congress made a good decision that will affect many Americans who find themselves in a truly bad situation," said NAR President Pat V. Combs. "Changing the IRS code is an issue of fundamental fairness. It would relieve a tax burden at a time when an individual or family has experienced a true economic loss arising from the sale or loss of their home. These families are already in financial distress and are most likely unable to pay additional taxes."
Combs added, "Realtors are about building communities, not just selling homes. We must work together to prevent the dream of homeownership from becoming a nightmare. This is just one step that will help families get on with their lives and begin rebuilding their economic security."
Passage of mortgage cancellation relief has been a legislative priority for the Realtor associations. Members of the Silicon Valley Association of REALTORS® (SILVAR), who are also members of NAR and C.A.R., have likewise lobbied in Washington, D.C. on this issue for several years. They noted their efforts have proven successful as their representatives have come out and supported this important legislation.
"Both the National Association of REALTORS® and the California Association of REALTORS® worked very hard to pass H.R. 3648. We are pleased to see this legislation move through the House with overwhelming support," said SILVAR President Mark Burns
SILVAR is a professional trade organization representing over 4,000 REALTORS® and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The Senate has not yet considered similar legislation. The White House supports a three- year mortgage debt exclusion instead of a permanent exclusion as passed by the House.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.