By Kenneth R. Harney
With the House and Senate back on Capitol Hill for the lame-duck session, preliminary negotiations aimed at keeping the country from careening off the “fiscal cliff” have begun in earnest.
The macro issues — how to reduce federal spending and how to raise federal revenue — are getting the bulk of the attention. But buried away in the discussions are bread-and-butter questions that could affect millions of homeowners and buyers:
•Will the biggest housing-related tax benefits — for mortgage interest, property taxes and home-sale capital gains exclusions — be on the chopping block in the coming six weeks? Or will these popular, multibillion-dollar annual supports for homeownership be deferred for the big game — the “grand bargain” negotiations involving a wholesale transformation of the tax code in 2013?
•Could Congress fail to extend the Mortgage Forgiveness Debt Relief Act before its expiration Dec. 31, potentially exposing large numbers of owners who received cancellation of unpaid principal balances on their loans to punitive income taxes on the amounts forgiven?
•Will smaller-scale deductions for mortgage insurance premiums, energy-conserving home improvements and tax credits for builders who construct energy-efficient new houses be renewed? Or could they become poker chips that “pay” for other concessions to real estate interests?
Although strategies and timing could change in the House or Senate, the betting among lobbyists and other analysts is that it’s unlikely that a still-fractious Congress will be able to pull off a major rewrite of the tax code during the lame-duck session.