Monday, October 01, 2007

New "Luxury Tax" on Vacation Homes?

Beware Congress's plans for helping homeowners in foreclosure.

The House Ways and Means Committee last week approved what amounts to a hike on the sale of vacation homes. A section of the foreclosure relief bill would "make it harder for people who sell their second homes to exclude as much as $500,000 in profit from capital-gains taxes," Bloomberg News reported. The Democrats inserted it as a way to raise $2 billion in additional taxes that would be needed to offset measures designed to protect "mortgage borrowers from taxes on debt forgiven in a foreclosure." Rep. Sam Johnson (R. Texas) dubbed it "a luxury tax on retirement homes'' that will hurt coastal areas, mountain states and resort areas.

Of course, the foreclosure relief bill must still be passed by the full House and Senate before it becomes law.

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