• An equalizing of the treatment of a home purchased for occupancy with a home purchased for rental purposes (defined as being rented to the same tenant for at least 181 days out of the year). The same exclusion from taxes for any future appreciation in the home value applies. This covers purchases made before July 1, 2010.
On the refinancing side, House Republicans plan to help keep people in their homes by proposing the following:
• A $5,000 refinancing tax credit to help families handle the cost of mortgage refinancing, buy down points or reduce their principal balance. Refinancing would be covered through July 1, 2010.
• Incentives for lenders to keep owners in their homes by refinancing mortgages and lowering monthly payments. If the homeowner agrees to share a portion of future home appreciation with the lender, both lender and borrower will be exempted from taxes on eventual profits. Nor will the borrower incur any tax liability as a result of the refinancing. This applies to refinancing through July 1, 2010.
The latter incentive instills a sense of shared sacrifice between borrower and lender. That’s a far cry from the administration’s plan for the government to step in foot the bill to modify the mortgages.
The housing crisis remains at the vortex of the current economic storm. We have to focus our efforts on stabilizing home prices and repairing the disparity between sellers and buyers.
These alternative solutions are House Republicans’ best way to reconcile two critical demands - taking swift and bold action in the face of a national crisis, and instead of rewarding bad or irresponsible behavior, rewarding the great majority of responsible homeowners.
President Obama says he values bipartisanship. By putting forward these constructive solutions to our nation’s most urgent problem, we are holding the door open for him.
It’s now up to him to walk through it.