Group Is Lobbying To Extend Tax Relief For Homeowners
A new law to give tax relief to homeowners who refinance a mortgage doesn't go far enough for some.
The Mortgage Forgiveness Debt Relief Act of 2007 gives a tax break to a homeowner when the mortgage lender forgives debt used to buy or improve a home. Now, a group is lobbying to extend those breaks to cover money received in a mortgage refinancing that is later used to pay medical bills, education loans or other nonhome costs.
Critics said the effort rewards people who use their homes as piggybanks by using the equity to secure loans. Advocates of the change, though, said it is needed to help those now facing foreclosure who have been hurt by subprime loans and falling housing prices.
A double whammy for many in the current housing market is a home that has lost value together with a loan that has become too expensive, according to Kurt Eggert, a professor of law at Chapman University School of Law in Orange, Calif., and a former member of the Federal Reserve Board's Consumer Advisory Council. "I think for people who are trying to save their homes, to have an additional tax burden is very problematic," said Mr. Eggert.
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