Saturday, November 10, 2007
Alternative Minimum Tax relief; Are reverse mortgages in jeopardy?
On Friday Nov. 9 the House of Representatives passed a bill to provide some relief from the alternative minimum tax, which has started to affect more moderate income families that take lots of certain kinds of deductions. The tax was originally constructed to make sure that richer people pay some tax, but was not correct with regard to inflation. The House also approved moderate income families that do not itemize deductions getting a home mortgage deduction in some cases.
The shift in policy is supposed to be paid for by treating “pyramid” income in certain sales businesses (mostly financial products and hedge funds) as work income rather than capital gains. It’s not clear if this could affect agents, renewal commissions, or partial volume offsets paid to distributors in many businesses. These are important to retirees, since many people go into sales businesses after formal retirement and earn commissions this way.
The story is by Jonathan Weisman, p A01, The Washington Post, Sat. Nov. 10, “House Passes Bill to Ease Alternative Minimum Tax,” link here.
The AMT could become important in the future to adult children if states start enforcing filial responsibility laws and adult children find ways to take extra deductions.
David S. Hizenrath has a story “Fannie Mae Expenses Up Sixfold from Bad Loans: Mortgage Firms Declines Contribute to Market Loss,” p D01 on today’s Washington Post, here.
The company doesn’t expect housing prices to mount a stable recovery until the endo of 2009. Many parts of the country may see a real estate recession similar to what struck Texas at the end of the 1980s and lasted well into the 90s. Many seniors have taken home equity loans and reverse mortgages and these could come.
Update: Nov. 13, 2007
The Washington Times has an op-ed on p A23 by Sen. Jeff Sessions (R-Alabama) "Families First: Tax Reform where it counts". He argues that even the reform bill will leave in place a system that favors high state taxes and penalizes families with children in those states. He believes that personal exemptions should count in figuring an AMT.