Brown pushes tax break

By TOM McPARLAND

tmcparland@vindy.com

YOUNGSTOWN

U.S. Sen. Sherrod Brown is pushing Congress to reinstate a tax break that allowed struggling homeowners to avoid paying taxes on forgiven mortgage debts.

If a homeowner cannot pay money owed on a mortgage, the lender can sometimes reduce or eliminate the debt to avoid foreclosure. Usually, that reduced amount would be taxed as income by the Internal Revenue Service.

But when the housing bubble burst, Congress passed a 2007 law that exempted homeowners from paying taxes on the reduction.

The law was extended through 2013, but it expired Jan. 1, leaving the struggling homeowners to pay higher taxes.

“If their principal is reduced by $20,000, they’re stuck with a tax bill, as if that were $20,000 in income,” Brown, D-Avon, said at a press conference Friday at Catholic Charities on Belmont Avenue.

Brown wants a minimum one-year extension on the tax-relief bill, which he said would ease the pain of a housing industry that still has not fully recovered from the recession of 2008.

Brown’s pitch came at a time when nearly a quarter of Ohio homeowners owe more on their mortgage than the actual worth of their property, according to the Ohio Association of Realtors.

Brown said a prolonged tax increase would have broader economic implications and hurt people who are struggling to stay in their homes.

“The government shouldn’t tax people in a situation where they’re right on the edge, anyway, to try to get back on their feet,” he added.