UPDATE: Mortgage Debt Cancellation Tax Relief

National Association of REALTORs
National Association of REALTORs

NAR Issue Brief
Mortgage Debt Cancellation Tax Relief

Update on the current status of the mortgage debt cancellation tax relief provision that expired at the end of 2013. As soon as the last one-year extension was passed on New Years’ Day 2013, NAR began working on another extension of this critical tax provision. With NAR’s encouragement, champions of this provision introduced bi-partisan bills in both the House and Senate (H.R. 2994/S. 1187), to extend the provision for one or two years. Unfortunately, the current prospect of these bills being enacted in the short term is not particularly high. We are facing four big hurdles.

1. The Chairmen of both of Congress’s tax committees (Senate Finance and House Ways and Means) have committed to passing comprehensive tax reform legislation before the end of 2014. As part of reform, they have both indicated that they plan to go through the long list of expiring items, including mortgage debt cancellation, and cull those that are not worthy of permanence and make all the “worthy” ones a permanent part of the tax law. However, tax reform is unlikely to be completed in the coming months. If Congress were to extend the expiring provisions now, it might appear that they were giving up on tax reform. This is not a signal they wish to send.

2. There are over 50 such expiring tax provisions (often referred to as “extenders”). Congress rarely passes single tax provisions by themselves. The rules in both the House (and especially the Senate) could allow for added amendments that would turn a simple bill with wide support into a politically divisive bill.

3. The extension of the tax relief “costs” money to the Treasury. The Joint Committee on Taxation estimates that a one-year extension of the mortgage debt cancellation relief would cost $3.7 billion. Some Members of Congress will insist that amount be offset by raising taxes elsewhere or cuts in spending – an ongoing debate in Congress.

4. The Chairman of the Senate Finance Committee, Senator Max Baucus of Montana, has been nominated by President Obama to serve as the next United States Ambassador to China. His departure from the Senate will turn the chairmanship over to Senator Ron Wyden of Oregon. As with any change in committee leadership, there will be an adjustment period.

In sum, NAR tried to have the extension passed by year-end but it was not possible. Because of the factors listed above, NAR has so far decided not to issue Member-wide Call for Action at this time, but has instead focused on working with Congressional leadership and the bill sponsors to find additional support for moving this legislation now that Congress has returned to Washington. Our lobbyists are in daily meetings with Members of Congress, pressing for an extension and providing the most up to date data on short sales and foreclosures to continue to highlight this as a top priority.

What can you do? First, you can contact your Representative and Senators to urge them to act on these bills. If you are in distressed situation, urge them to do so as well. The more Members hear from constituents, the better.

NAR cautions REALTORS® against giving clients tax advice, as every situation is different, but at this point our best estimate is that Congress will pass some extension of this law, probably late in 2014, and make it retroactive. There is precedent for Congress doing this, but no guarantee.

NAR cautions REALTORS® against giving clients tax advice, as every situation is different, but at this point our best estimate is that Congress will pass some extension of this law in 2014 and make it retroactive. There is precedent for Congress doing this, but no guarantee.

Elk Grove Residents Urged to Reduce Water Usage by 20 Percent

Real Estate in Elk Grove, Morse Park
Real Estate in Elk Grove, Morse Park

The City of Elk Grove is urging residents to voluntarily cut back water 
consumption by 20 percent, joining numerous local agencies in a regional water conservation 
effort.   
  
Last night, the Elk Grove City Council unanimously adopted a resolution establishing support for 
water conservation and conservation education.   
  
“The state of California is facing a very critical situation, and the City of Elk Grove will do its part 
to temper water usage and urge residents to conserve,” said Mayor Gary Davis.  “Elk Grove is 
committed to fostering an environment where the city, residents and business owners unite to 
demonstrate good stewardship of our most precious resources.  The City of Elk Grove is 
committed to educating the community about the critical importance of water conservation 
during this unprecedented drought.”   
  
The 20 percent reduction can be achieved through increased water conservation at City 
facilities, enhanced public information in collaboration with local agencies, and increased 
enforcement of the City’s water conservation ordinances.  Residents can help achieve the 20 
percent savings by making small changes in everyday household routines.  Household water 
conservation tips and watering schedules are available on the Elk Grove Water District and 
Sacramento County Water Agency websites.   
  
In 2013, Northern California had its third consecutive year of below average rainfall and driest 
year ever recorded.  This has resulted in record low water levels at critical water storage sites, 
including Folsom Lake.  The City of Elk Grove is not a water purveyor.   The Elk Grove Water 
District and Sacramento County Water Agency serve the Elk Grove area and have both passed 
voluntary conservation measures.   
  
For more information about water conservation, contact the Elk Grove Water District at 685‐
3556 or Sacramento County Water Agency at 874‐6851.