Remember mortgage debt cancellation? And how it was not extended for 2018? Well, it was just included in the big spending package for fiscal year 2020 with a retroactive reauthorization for 2018. If you had clients with a short sale or foreclosure, those folks can go back and filed an amended return that excludes the phantom income they were taxed on as part of the debt forgiveness. Paperwork can be a pain, but it will be worth the savings in the end!
Read below for more updates from NAR on top priorities they fought for in the spending bill including an extension of Terrorism Risk Insurance and the National Flood Insurance Program.
From NAR Government Affairs….
Terrorism Risk Insurance Program
NAR’s advocacy team has spent months calling on Congress to reauthorize TRIP before its scheduled expiration in 2020, publicly supporting Chairwoman Maxine Waters’ Terrorism Risk Insurance Program Reauthorization Act of 2019.
Terrorism risk insurance is often required to secure necessary financing for the thousands of commercial practitioners nationwide. Absent TRIP, the country would likely see a repeat of what happened in 2001, when many insurers raised terrorism risk insurance to unsustainable prices or stopped offering coverage entirely. NAR believes this long-term agreement will provide stability to the commercial real estate industry while playing a critical role in U.S. national security.
National Flood Insurance Program
On flood, NAR is pleased to see a 9-month program extension worked through Congress with little fanfare. While the agreement will ensure NFIP policies can be issued and renewed through the end of the fiscal year, we will continue to push lawmakers to use the afforded time to find compromise on a longer term reauthorization and reform package.
As we know all too well, this program has operated on a string of short-term extensions and endured multiple lapses over the past two years. From Montana to Mississippi and everywhere in between, that unpredictability has put home sales in jeopardy and left insurance policies in limbo. While NAR research has shown that NFIP lapses threatens 1,300 transactions each day, the resulting uncertainty threatens our nation’s overall housing market and economic stability.
NAR has strongly supported the NFIP Reauthorization Act, also authored by Chairwoman Waters, which includes a 5-year program reauthorization along with reforms to improve mapping, enhance mitigation, and remove obstacles to private flood insurance. H.R. 3167 is the product of extensive bipartisan negotiations between Waters and House Financial Services Committee Ranking Member Patrick McHenry, striking a delicate balance between NFIP sustainability and affordability. This legislation unanimously passed the Committee in July and we will maintain our call for lawmakers to work through the legislation this congress.
As we are reminded in this country every year, floods are not just a coastal issue. In fact, since 1996, 98% of U.S. counties has had at least one federal disaster declaration. Very simply, without reforms, the NFIP’s ability to continue providing critical protections to people across America is very much in doubt.
Finally, included in the package are temporary extensions of three tax provisions directly impacting our industry: 1) the exclusion of forgiven mortgage debt from gross income, meaning that owners of primary residences who sold them short and had part of their mortgage debt written off will not have to pay tax on the amount forgiven; 2) the deductibility of premiums for mortgage insurance; and 3) the deduction of the cost of improvements to commercial buildings that make them energy efficient. These provisions had all expired at the end of 2017. The bill would extend them, retroactive to the beginning of 2018, and through the end of 2020.