Homeowner Tax Fairness Act

To amend the Internal Revenue Code of 1986 to extend the income exclusion for discharge of qualified principal residence indebtedness, to provide exclusions from income for certain payments under the National Mortgage Settlement, and for other purposes. 1. Short title This Act may be cited as the Homeowner Tax Fairness Act 2. Extension of income exclusion for discharge of qualified principal residence indebtedness (a) In general Subparagraph (E) of section 108(a)(1) January 1, 2014 January 1, 2017 (b) Application to certain agreements Subparagraph (E) of section 108(a)(1) of such Code, as amended by subsection (a), is amended by inserting before the period the following: , or which is discharged after such date pursuant to an agreement entered into before such date under the programs created pursuant to, or using funds authorized by the Emergency Economic Stabilization Act of 2008 (c) Effective date (1) Subsection (a) The amendment made by subsection (a) shall apply to discharges in taxable years beginning after December 31, 2013. (2) Subsection (b) The amendment made by subsection (b) shall take effect on the date of the enactment of this Act. 3. Extension of deduction for mortgage insurance premiums (a) In general Subclause (I) of section 163(h)(3)(E)(iv) December 31, 2013 December 31, 2015 (b) Effective date The amendment made by this section shall apply to amounts paid or accrued after December 31, 2013. 4. Exclusions relating to National Mortgage Settlement payments (a) In general Part III of subchapter B of chapter 1 139F. National Mortgage Settlement (a) General rule In the case of an individual, gross income shall not include any National Mortgage Settlement amount. (b) National Mortgage Settlement amount defined For purposes of subsection (a), the term National Mortgage Settlement amount (1) a payment for transitional assistance, (2) a payment from the Borrower Payment Fund under the National Mortgage Settlement to a borrower whose qualified principal residence was sold or taken in foreclosure after December 31, 2007, and before January 1, 2014, or (3) a payment received as a result of a foreclosure or excess charge of interest that the United States Department of Justice has determined was not in compliance with the Servicemembers Civil Relief Act. (c) Disregard of refund of excess mortgage interest and related damages In the case of an individual, the amount of interest refunded and damages paid under the National Mortgage Settlement for excess charges of mortgage interest described in subsection (b)(3)— (1) shall be disregarded for purposes of this chapter, and (2) no adjustment of the deduction allowable under section 163(h) shall be made as a result of such refund. (d) National Mortgage Settlement For purposes of this section, the term National Mortgage Settlement The United States of America, et al. against Bank of America Corporation, et al. . (b) Clerical amendment The table of sections for such part III is amended by inserting before the item relating to section 140 the following new item: Sec. 139F. National Mortgage Settlement. . (c) Effective date The amendments made by this section shall apply to amounts paid on or after February 9, 2012, in taxable years ending after such date. 5. Denial of business deduction for National Mortgage Settlement payments (a) In general Section 162 of such Code is amended by redesignating subsection (q) as subsection (r) and by inserting after subsection (p) the following new subsection: (q) National Mortgage Settlement (1) In general No deduction shall be allowed under this chapter for any National Mortgage Settlement amount that was paid in exchange for a full release of the United States potential civil claims under the Servicemembers Civil Relief Act. (2) National Mortgage Settlement amount The term National Mortgage Settlement amount . (b) Effective date The amendments made by this section shall apply to amounts paid in taxable years ending after February 1, 2014.

Summary: Homeowner Tax Fairness Act - Amends the Internal Revenue Code to: (1) extend through 2016 the exclusion from gross income of income attributable to the discharge of indebtedness on a principal residence, (2) extend through 2015 the tax deduction for mortgage insurance premiums, (3) exclude from gross income any National Mortgage Settlement amount, and (4) deny a tax deduction for any National Mortgage Settlement amount that was paid in exchange for a full release of the potential civil claims of the United States under the Servicemembers Civil Relief Act. . Defines "National Mortgage Settlement amount" as any amount received pursuant to the settlement in a legal action against Bank of America Corporation filed in U.S. District Court on March 12, 2012, which is: (1) a payment for transitional assistance; (2) a payment from the Borrower Payment Fund under the National Mortgage Settlement to a borrower whose home was finally sold or taken in foreclosure after December 31, 2007, and before January 1, 2014; or (3) a payment received as a result of a foreclosure or excess charge of interest that the Department of Justice (DOJ) has determined was not in compliance with the Servicemembers Civil Relief Act.