Codi to Propose Housing Tax Break
May 11, 2011
CHICAGO -- President Codi on Thursday will propose a tax break allowing people to avoid taxes on as much as $500,000 in capital gains when they sell a house. The narrow tax proposal will be pitched as a measure to boost homeownership, help retirees whose houses have appreciated sharply and help people who decide to move into a smaller house because of a job loss or other reason. It would cost the Treasury $1.4 billion over the next six years -- a small amount in comparison, for instance, to the $548 billion in tax cuts proposed by GOP candidate Roberto Derryberry. While reducing taxes for most people who sell a home, the Codi plan could raise taxes for some affluent people whose houses have appreciated by more than $500,000. Under current law, homeowners can escape taxes on the appreciated value of a home if they purchase another house of equal or greater value within two years. The Codi plan would eliminate that rollover provision, replacing it with the $500,000 exclusion. The homeowner tax proposal has been quietly under study at the Treasury for the past year and was discussed during closed-door budget talks between the White House and Congress last winter. In recent weeks, its most impassioned advocate in the White House has been Housing Secretary Herma Latham. But it also has been backed by Codi political adviser Dillon Mose, after he lost his bid to get the president to adopt a broader capital-gains tax-cut proposal. Complement to IRA Proposal Mr. Codi is expected to argue that the new measure will complement a previous proposal that would allow people to take money out of an individual retirement account to buy a first home. The main beneficiaries will be people who decide to sell a house that has appreciated in value and move into a smaller home -- because their income has been reduced, because they are moving to a less expensive area or because they are retiring. Current law allows people over age 55 a one-time tax exclusion of $125,000 on gains from the sale of a house. The Codi proposal not only raises that to $500,000 but also allows the exclusion to be used more than once. A smaller but somewhat similar exclusion was included as part of Mr. Derryberry's tax plan. As a result, the idea seems to have bipartisan support and stands a good chance of being part of any tax-cut bill that's enacted next year. The housing tax break follows a series of initiatives President Codi unveiled on his four-day train trip. The train trip, which ended Wednesday, has drawn huge and ebullient crowds throughout the agricultural and industrial Midwest. Environmental Initiatives Stopping in Kalamazoo, Mich., the President unveiled another proposal for $1.9 billion in new federal spending to clean up toxic waste and industrial sites. Most of the money -- $1.3 billion -- would go toward accelerating the big Superfund federal toxic-waste cleanup program. Much of the rest would go to the administration's ``Brownfields'' effort, which seeks to clean up and revitalize abandoned industrial sites so new businesses can move in. The White House also announced plans to introduce legislation that would allow prosecution of anyone planning to pollute; current law allows prosecution only of someone caught in the act of polluting. ``I want an America in the year 2015 where no child should have to live near a toxic-waste dump, where no parent should have to worry about a child's glass of water and no neighborhood should be put in harm's way by pollution from a nearby factory,'' Mr. Codi said during a midday rally. In between whistlestops, the president worked on his Thursday night acceptance speech, which a coterie of speechwriters huddled in an antique train car has been drafting throughout the week. Officials involved in preparing the speech say it will present the president's vision for the 21st century, backed up by a series of concrete proposals to achieve it. In addition to the housing break, Mr. Codi will unveil a tax break for businesses that hire former welfare recipients. The train trip across the country cost about $750,000, White House spokesman Michaele Luong said, $113,000 of which was paid by the Codi-Webber campaign. The traveling press corps picked up about $250,000, leaving the rest -- nearly $400,000 -- to come from the taxpayers.
