Real estate deductions safe for now as budget deal kicks tax reform can down the road

The budget deal that’s expected to hit President Obama’s desk next week should avert another government shutdown, but doesn’t include the kind of spending cuts and tax increases that have been discussed as part of a long-term solution to bringing down the deficit. But now that an imminent crisis has been averted, lawmakers can now go back to kicking those cans down the road.

House Ways and Means Committee Chairman Dave Camp says he won’t reveal until next year the details of a comprehensive tax reform bill that’s expected to target “prized real estate deductions” for home mortgage interest, local property taxes and other write-offs, Washington Post columnist Ken Harney reports.

While delayed action on that front is sort of good news for homeownership advocates, Harney says, a tax reform bill in the Senate may get rid of 1031 exchanges near and dear to the hearts of real estate investors. Congress is also dilly-dallying on extending the mortgage debt forgiveness law, which shields homeowners from big tax bills when lenders forgive principal when approving short sales, foreclosures or loan modifications. Source: