October 9, 2007

Debt Forgiveness Tax Bill Passes House

Debt Forgiveness Tax Bill Passes House

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The House of Representatives have overwhelmingly approved legislation providing tax relief to homeowners facing a foreclosure.
Under the bill, which was approved by a vote of 386-27, any debt forgiven to homeowners unable to repay their mortgage would no longer be treated as taxable income.

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The legislation was passed in response to a subprime mortgage crisis that has reduced property values and left a growing number of homeowners unable to pay rising interest costs on their loans.

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To cover the roughly $2 billion 10 year cost of the bill, the bill would change tax rules on the sale of vacation homes and rental property that were used as a principal residence.

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The White House said the tax relief should be temporary to help people through the current crisis and also objected to the tax change on the sale of vacation homes and rental properties.

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