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H.R. 3648 - Mortgage Forgiveness Debt Relief Act of 2007 | Summary
H.R. 3648 would make several changes to tax law regarding principal residential property.
The legislation would reduce revenue by Excluding from Taxation the Gains on Certain Mortgage Debt forgiven on principal residences, by extending the deduction for private mortgage insurance, and by providing a broader basis for an entity to qualify as a cooperative housing corporation.
H.R. 3648 would raise revenue by Reducing the Exclusion from Capital Gains on sales of some principal residences.
H.R. 3648 would also shift some corporate receipts from 2013 to 2012.
Forgiveness of Mortgage Debt
H.R. 3648 would Exclude from the Gross Income of a taxpayer any income by reason of discharge, either in whole or in part, of debt on the taxpayers' principal residence.
Such debt may include the initial loans to acquire, construct, or substantially improve the residence as well as any refinancing of debt to the extent the refinancing does not exceed the amount of the refinanced indebtedness.
The exclusion from gross income would apply to discharges of indebtedness on or after January 1, 2007.
Extension of Deduction for Private Mortgage Insurance
Current law allows certain premiums paid or accrued for qualified mortgage insurance by a taxpayer in connection with the taxpayers' residence be treated as interest; they are therefore deductible.
This tax treatment terminates for any amount paid or accrued after December 31, 2007.
H.R. 3648 would extend the deduction through December 31, 2014.
Cooperative Housing Corporations
Current law allows tenant-stockholders in cooperative housing corporations to deduct from taxable income certain amounts paid to the corporation that represent real estate taxes and interest on indebtedness related to the property.
H.R. 3648 would expand the criteria that an entity can satisfy in order to qualify as a cooperative housing corporation.
Gains on Sales of Principle Residences
Taxpayers are allowed to exclude up to $250,000, ($500,000 for married couples filing jointly), of the gain realized on the sale of a principal residence, generally as long as the property was used as a principal residence for at least two of the five years prior to sale.
The legislation would reduce the exclusion for some residences that were not the principal for all of the prior five years.
Such time when the property was not the principal residence would not include temporary absences due to change in place of employment, health, or other unforeseen circumstances, but would include rental of the property.
H.R. 3648 would be effective for sales and exchanges after December 31, 2007. |  | asked by grandpa24551, 10/6/2007 |
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Categories:
Debt and Mortgages, Housing
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