President Expected to Sign Terrorism Insurance Bills
December 19, 2007
Congress sent bills to the White House extending the Terrorism Insurance bill and a measure to end the taxation of "underwater mortgages." The Terrorism Risk Insurance Act (TRIA) was extended for seven years. The program remains virtually unchanged from current law.
H.R. 3648, would end taxation of forgiven debt that results through foreclosure, sale or loan restructuring. Currently the amount of indebtedness discharged is taxed as income. The bill provides temporary relief through the 2009 tax year. It also extends the tax deductibility of private mortgage insurance through 2010.
The bill provides a two-year grace period for widows and widowers to utilize the full $500,000 exclusion that married couples have on the sale of their home. Current law requires the home to be sold in the same year as the death to qualify. It also excludes from income any state and local tax abatements received by volunteer firefighters and other emergency personnel. The President is expected to sign both bills into law.