The Phantom Tax and the National Association of Realtors®
By Timothy L. Stanley
For many years, the National Association of Realtors® has pushed and prodded Washington to eliminate the Phantom Tax on financially distressed homeowners. The National Association of Realtors® (NAR) is the “Voice of Real Estate” and has always been on the side of homeowners needing tax relief. The NAR has made it clear that it is unfair to tax a homeowner for a loss associated with the misfortune of selling a home at a loss. The financially strapped homeowner, who has a mortgage loan forgiven due to a loss resulting from a short sale or foreclosure, has been taxed heavily. The Phantom Tax and tax code has been structured in an unfair manner.
It has been the NAR’s position that the Phantom Tax was unfair to homeowners who had fallen on hard times and lost their home. Over the years, homeowners have been struck by unforeseen medical expenses, job loss, and now adjustable mortgages. The pain related to financial hardships was compounded by the loss of a home. Then, the tax collector would come after a down and out citizen after the loss. There has always been something fundamentally flawed with this taxing method. In pursuit of fairness and compassion, a new taxing process has been needed with regards to distress homeowners.
It now looks like Washington may be addressing this issue. The Mortgage Cancellation Tax Relief Act H.R. 3648 passed the U.S. House of Representatives on October 4. The senate is considering a similar act. President Bush has already indicated that he would be in favor of addressing this issue. Thus, it appears that Washington is close to passing tax relief for homeowners who are distressed financially.
According to experts, the acts being considered would effectively eliminate the Phantom Tax and revise the tax code. This is good news for financially strapped homeowners. Plus, this will be good for the overall economy. Displaced homeowners relieved of the tax burden associated with a short sale or foreclosure can redirect more of their financial resources toward basic consumer items. This stimulate all phases of the economy.
If you would like information about real estate values in your area, please call Timothy L. Stanley at 626-230-0741. He is a Business Writer and Realtor® with Dilbeck GMAC Real Estate . This article was published in the Rosemead Herald and The California Reporter. All Rights Reserved.
