Fiscal cliff deal preserves key housing tax breaks

TRD New York /
Jan.January 02, 2013 03:00 PM

The U.S. housing market stands to benefit from two tax provisions that were left alone in the hasty budget compromise that Congress reached yesterday, CNBC reported. In seeking to avert the fiscal cliff, federal lawmakers opted not to touch the mortgage-interest deduction and extended tax relief on mortgage debt forgiveness for a year.

President Obama had tweeted in the heat of the fiscal cliff debate that mortgage-interest deductions could hit the chopping block if Republicans didn’t agree to raise taxes on America’s wealthiest individuals. Mortgage-interest deductions are a nearly $100 billion-per-year revenue drain for the U.S. Treasury, according to syndicate real estate columnist Kenneth Harney, but some real estate experts feared that eliminating the tax break would have a deep impact on the housing market.

As for the tax break, “an extension of the tax break is positive for home values by reducing the number of foreclosures and helping more troubled borrowers stay in their homes,” Jaret Seiberg of Guggenheim Partners told CNBC. “That means less supply on the market.”

Observers were concerned that without the debt forgiveness tax break, homeowners would not consent to short sales, as they would have received a tax bill. [CNBC] –Zachary Kussin

Related Articles

The bank is accused of systematically trying to foreclose on mortgages after the state’s six-year statute of limitations had passed. (Credit: iStock)

BNY Mellon faces suit over foreclosures from the housing crash

Seattle, Washington (Credit: iStock)

Good luck buying an affordable home in these US cities

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

Buyer sentiment was strong at the close of 2019 (Credit: iStock)

Home buyers start 2020 with drop in mortgage rates

(Credit: Getty Images, iStock)

Small Talk: Real Estate Predictions for 2020

Many are predicting a housing bubble (Credit: iStock)

Europe could be headed toward a housing crisis

Housing and Urban Development Secretary Ben Carson (Credit: Getty Images, iStock)

HUD wants to jumpstart bank lending on low-income homes

Lenders issued the most mortgages in 14 years last quarter (Credit: iStock)

Nonbank lenders could give serious boost to cooling housing market