WASHINGTON, D.C. – The U.S. House of Representatives passed the Mortgage Cancellation Relief Act (H.R. 3648) Thursday by a 386-27 vote. The bill included a provision co-authored by U.S. Rep. Ron Lewis (KY-02) to relieve tax obligations on those who sell homes that have lost equity and have been forgiven a potion of outstanding mortgage debt.

 

“I am pleased that so many of my colleagues joined together to support this critical legislation,” said Lewis. ‘This bill is an example of what happens when both parties work together to produce good policy that will benefit millions of Americans.”

 

Under current law, only two categories of individuals pay taxes when selling their principal residence: those who have been able to realize a capital gain of more than $250,000 ($500,000 on a joint return) and those who lose the equity in their home and are forced to pay tax if the lender forgives some portion of the mortgage debt. 

 

Lewis’ provision states that no tax will be collected when a lender forgives part of the mortgage on the sale or disposition of a principal residence. The proposal has earned the support of the National Association of Home Builders, the National Association of Realtors, and the United States Department of The Treasury.

 

President Bush announced his support for the proposal during an August 31st Rose Garden news conference discussing homeownership financing.

 

“Addressing this tax code inequity and other long-term issues in the housing market cuts to the core of our national economic stability as we seek to calm financial markets, aid local communities, and support one of our most basic American aspirations: home ownership,” said Lewis.

 

            H.R. 3648 will next move to the U.S. Senate for consideration.

 

 

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