Federal Tax Report
|NAR Successful In Injecting Housing Components in Federal Economic Stimulus Package|
|Good news for struggling homeowners and the housing market.|
The House of Representatives, along with Treasury Secretary Paulson, on behalf of the Bush Administration, announced a bipartisan economic stimulus package with provisions that can help jumpstart the housing market and protect some current homeowners.
An overhaul of the Federal Housing Administration’s mortgage insurance program and an increase in the size of mortgage loans that Fannie Mae and Freddie Mac can purchase are key housing components included in the economic stimulus package announced yesterday. As late as last week, there was uncertainty on whether housing finance was going to be part of the stimulus package. However, NAR and its members did not give up, focusing on continued education and communications with Members of Congress both in Washington, D.C. and in their home districts.
There is still some confusion on Capitol Hill regarding specific proposal elements, but it is clear that the House and the administration view strengthening the housing market as key to improving the national economy.
Here is what currently is being reported as included in the package:
|House Passes Bill to Eliminate Flood Insurance Subsidies on Some Primary Residences|
| The House of Representatives on January 23 passed H.R. 3959, a bill that would eliminate subsidized insurance rates for pre-FIRM primary residences sold for at least $600,000 after the date of enactment. The bill requries that such residences pay actuarial rates and would accomplish this by increasing NFIP premiums on such primary residences by 15% once every 12 months until an actuarial rate is reached. A pre-FIRM structure is one that was not constructed or substantially improved after the later of: (1) December 31, 1974; or (2) the effective date of the initial rate map published by the Director of the Federal Emergency Management Agency (FEMA) under the National Flood Insurance Act of 1968 for the area in which such structure is located.|
The bill was introduced by Rep. Scott Garrett (R-NJ) and co-sponsored by Rep. Barney Frank (D-MA), Chairman of the Committee on Financial Services. During the debate on the House Floor, Chairman Frank characterized the bill as “environmentally and fiscally responsible.” He added that this bill would be considered as part of the comprehensive NFIP reform bill (H.R. 3121) passed by the House in September when the House and Senate negotiate a compromise to House and Senate NFIP reform legislation later this year.
NAR opposed H.R. 3959 and communicated its opposition to Congress in letters dated January 22, 2008.
Federal Tax Report
|Senate Poised to Pass Mortgage Cancellation Relief|
|President Bush did sign the mortgage cancellation bill that NAR aggressively sought during 2007. It is a temporary provision. Mortgage debt on a principal residence that is forgiven between January 1, 2007 and December 31, 2009 will NOT be treated as taxable income. The newly-enacted legislation did NOT include any changes to the treatment of second homes that are converted to principal residences.|
|Senate Considers Limit on Some Exchanges|
| The Senate version of a major Farm Bill (H.R. 2419) included a curious limitation on some like-kind exchanges. The proposed modification would disqualify exchanges of “improved real property” with “unimproved agriculture real property.” Thus, the owner of a building could not use the 1031 exchange technique to acquire “unimproved agriculture real property.” The provision would have had the effect of imposing a “toll charge” on any person selling the affected property. The toll charge would have taken the form of either a reduction in the price that the seller could obtain on sale or the transaction would require a selling farmer/rancher to pay tax on the transaction. |
NAR vigorously opposed this provision in the Farm bill. Other organizations followed NAR’s lead. NAR is cautiously optimistic that this provision will not be included in any final version of the Farm Bill.
|House Small Business Committee Hearings on Small Business Health Coverage Issues Continue|
| The House Small Business Committee held the second in a series of hearings on the limited health insurance options for small business owners on January 23rd. Six small business owners – a day care operator, florist, CPA, farmer, custom homebuilder and a doctor with a small family practice – told the Committee about the unique obstacles smaller companies face in finding affordable coverage. The stories ranged from a firm being denied eligibility because of a pre-existing condition to a small business owner having to decide between paying their mortgage and providing health care options to employees. |
According to a recent study, small employers have seen their health premiums increase an average of more than 8 percent a year since 2001 and firms with less than 24 workers have experienced even more severe increases. Witnesses–some of whom had been forced to change health plans three times in less than 48 months–said cost was a major concern, but not the only challenge. These firms must also regularly handle massive amounts of paperwork for medical claims, and devote much of their valuable time to working with insurance vendors and brokers.
Chair Velazquez noted that while she doesn’t expect large-scale legislative reform to be completed this year, she is hopeful that all small business groups will remain vigilant in their efforts to share the small business struggles with lawmakers at every level.
Last modified: January 29, 2008 at 4:47 pm | Originally published: January 29, 2008 at 4:47 pm
Printed: September 29, 2020