Still hope for tax relief from Congress Property-rights bill's chances appear slim

Nation's Housing

April 28, 1996|By KENNETH R. HARNEY

WASHINGTON -- With the 104th Congress heading for the homestretch -- and into the heat of the campaign season -- homeowners, buyers and investors may be interested to know: What's the status of key real estate, tax and property rights issues pending on Capitol Hill?

Here's a quick update.

Taxes: Don't hold your breath, but there's still a chance that the Republican-controlled Congress and the Clinton administration will agree on a compromise tax package, including some form of capital gains relief covering all forms of real estate sales.

If the ideological hard-liners in both parties "who would rather postpone all the big issues until after the November elections prevail," a congressional staff member said, "then forget about any significant tax bill this session. Nothing is going to move in that scenario."

But if both Mr. Clinton and the likely Republican presidential nominee, Senate Majority Leader Bob Dole of Kansas, want to be able to point to concrete legislative accomplishments under their leadership, he said, "then I think there's more of a chance for a bill than the public at large probably assumes."

Tied into the capital gains bill are two relatively noncontroversial, real estate-related tax provisions. They are:

Tax relief for homeowners who incur losses when they sell their houses. Under the proposal, you could write off capital losses suffered on your home sale against any other capital gains you've racked up in the same year. If your home sale losses exceeded your capital gains, you could roll the losses into future tax years to offset subsequent capital gains.

Ending the so-called "tainted spouse" problem for seniors 55 years or older who want to use the one-time-only $125,000 tax-free exclusion on their home sale capital gains. Seniors who've used the exclusion and then re-marry after the death of a spouse or a divorce carry a penalty into the new marriage: They prevent their new spouse from taking the $125,000 write-off on his or her own home.

Private property rights protection legislation: One of the top priorities of the so-called Republican Revolution, a property rights compensation bill (H.R. 925), passed the House last year. No measure has yet passed the Senate. However, Senator Dole reportedly intends to bring his own version of the legislation to the floor for a vote within the coming month.

The Dole bill would require compensation to private real estate owners for any diminution of 33 percent or greater in the market value of their property that was caused by a federal agency's action.

The outlook for a Dole-House Republican compromise bill this session is murky at best. Some Senate Republicans, concerned about public opinion polls critical of the party's environmental stands, may want to duck the issue altogether.

The Clinton administration, on the other hand, might actually welcome the opportunity to veto a property rights measure this year -- adding another notch in its belt against bills inspired by the Contract With America.

Kenneth R. Harney is a syndicated columnist. Send letters care of the Washington Post Writers Group, 1150 15th St. N.W., Washington, D.C. 20071.

Pub Date: 4/28/96

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