The U.S. House and Senate approved a package of tax extensions that include an important provision that helps distressed homeowners through extending the Mortgage Forgiveness Tax Relief Act for all of 2014.
The approval will be retroactive for homeowners who sold their home during 2014, and the act prevents underwater borrowers from paying taxes on any mortgage debt forgiven or cancelled by a lender in a short sale (home was sold for less money than was owed).
The legislation also included one-year extensions of the 15-year depreciation schedule for leasehold improvements and the deduction for improvements to energy efficient commercial buildings. However, the Senate failed to renew the federal terrorism risk insurance program, which will put a damper on commercial real estate around the country. Up for vote was a six-year reauthorization of the Terrorism Risk Insurance Act, which passed with overwhelming support in the House.
"TRIA provides a crucial framework for economic recovery in the wake of a catastrophic terrorist attack and allows the U.S. to maintain a stable terrorism insurance market so employers can invest in properties and create jobs without assuming the risk and liabilities of a terrorist attack," National Association of Realtors President Chris Polychron said. "Terrorism risk insurance is also a requirement of many existing commercial mortgage balances, so those whose coverage will lapse at the expiration of TRIA will be in technical default of their mortgage terms. Without action, terrorism insurance will become scarce and expensive, causing construction projects to stall, commercial property values to drop and the ongoing economic recovery to slow."
NAR also testified earlier this month before the U.S. Senate Banking Subcommittee on Housing to bring attention to the need for better access to mortgage credit for minorities, young buyers, and low-and moderate-income earners remains a serious problem. NAR estimates that in 2013, nearly 400,000 creditworthy borrowers were priced out of the housing market because of high FHA insurance premiums. By lowering its fees, FHA could provide greater access to homeownership for historically underserved groups.
Lauren Bunting is a licensed realtor with Bunting Realty, Inc. serving Worcester and Wicomico counties.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
