Presidential Veto Kills Pro-Homeowner Bills
If you're a politician looking for a good idea, then take a look at making
bond-financed loans available to first-time homebuyers, or encouraging
renovation of historic homes. What's not to like? Unfortunately in
Washington, good ideas sometimes get lost in the political tug-of-war between
the President and Congress, and that's what happened to these and other key
housing provisions in the tax bill that President Clinton recently vetoed.
Those provisions died quietly, drowned out by all the political posturing and
fanfare over taxes and spending.
One major provision would have increased the availability of a discount-rate
mortgage program to approximately 65,000 to 70,000 middle-income, first-time
homebuyers. Those bond-financed loans, financed by private lenders in
cooperation with state and local housing finance agencies, are extremely
important in some areas of the country. The demand is high and the waiting
list long for these popular loans. 130,000 families a year take advantage of
the low, fixed interest rates; lower down payments, and flexible requirements
regarding credit history and debt-to-income ratios. The bonds earn interest
on a tax-free basis that helps to create the favorable mortgage terms. But
unfortunately, the supply of mortgage money is restricted, and now the
proposed expansion won't happen for 65,000 to 70,000 borrowers.
Another obscure but noncontroversial provision would have expanded the use of
federal tax credits for renovating rental apartments and houses. An
additional 28,000 units per year were to be renovated under the program for
lower and middle income families. That idea also fell to the wayside
Support in both houses of Congress.
Historical renovations were to receive a boost, too, under the doomed tax
bill. Buyers, owners or renovators of homes located in historic districts
could qualify for a tax deduction for 50 percent of the cost of renovating or
preserving their homes. That would have been a major incentive to preserve
thousands of the nation's historic residences, according to the National
Trust for Historic Preservation.
Yet another positive measure would have changed tax rules that discriminate
against military, Foreign Service, and private employees who sell their homes
after spending years abroad. Under the current rules, sellers can exclude
from capital gains tax up to $500,000 for married couples and $250,000 for
single filers when they have occupied a primary residence for two out of the
five prior years. Overseas personnel typically have little control over the
timing and duration of their assignments. The provision would have made it
easier to qualify for the two-year/five-year exemption. But that provision
died, as well.
On the bright side, large majorities of the House and Senate sponsored these
provisions, so their chances of passing at some time in the future are good,
if Congress and the President get their act together.
Sources used to create this article include writer Kenneth Harney and The