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House expands passive-loss reform.

When the House Ways and Means Committee last week passed its version of the Clinton tax bill, they agreed to a passive-loss provision that is more liberal than that proposed by the president.

In his deficit-reduction plan, President Clinton supported allowing those active in rental real estate to use the losses incurred to offset the income realized from that activity. Having made changes, House lawmakers will be sending to the Senate a tax bill that enables those active in residential real estate to use those losses to offset all business income.

The tax reform act of 1986 deemed all residential real estate passive and, therefore, prohibited the use of losses to offset income. The industry has since then been struggling for some measure of relief. In one of the last moves of his administration, former President Bush vetoed a hill (H.R. 11) containing a broad passive-loss reform measure.

"We're a step closer," said Cary Brazeman, spokesperson for the National Realty Committee. "We still have many steps ago."

This provision of the tax hill, Brazeman said, is necessary to put real estate on the "same footing" as members of other industries.

If passed, investors and operators will have to meet a minimum requirement of time devoted or money investment.
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Title Annotation:House Committee on Ways and Means legislation on real estate tax
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:May 19, 1993
Words:209
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