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OUTLOOK FOR TAX LEGISLATION DISCUSSED AT NAR CONFERENCE

 WASHINGTON, April 26 /PRNewswire/ -- The outlook for tax legislation, including some provisions favorable to real estate, is promising this year, according to industry and congressional tax experts speaking at the National Association of Realtors' Midyear Conference and Trade Exposition.
 Pending tax proposals were discussed during a forum featuring Jeff DeBoer, vice president and general counsel of the National Realty Committee; Tom Morgan, tax counsel and legislative director for U.S. Rep. Michael Andrews, D-Texas; and Greg Powell, minority tax counsel for the U.S. Senate Finance Committee.
 Nearly 7,000 Realtors and guests are attending the April 23-28 conference.
 According to Morgan, the chances for passage of a tax package look more favorable this year than at any time since enactment of the Tax Reform Act of 1986. The enactment of proposals to stimulate real estate activity is crucial to the nation's economic recovery, he noted. "Unless we treat real estate equitably, we won't see the true growth we need to get the economy moving," he said.
 Tax legislation has been proposed by the Clinton administration; and in addition, separate bills have been introduced in the House (H.R. 749) and the Senate (S.342). One key provision, a passive loss reform measure allowing material participants in real estate to deduct losses against income, is now included in the administration's proposal and both the House and Senate bills.
 According to DeBoer, the aim is to "correct an overreaction to the overstimulation" experienced by the commercial real estate industry between 1981 and 1986. During this time, numerous tax advantages existed, some of which led to excess development.
 Calling the current bills "unbelievably modest," DeBoer stressed that the intent is not to restore pre-1986 incentives. "All we're saying is that people in the real estate business should be able to deduct their losses ... that there should be a level playing field between real estate and other types of investments," he said.
 The House bill, introduced by Rep. Andrews and William M. Thomas, R- Calif., now has 103 co-sponsors, including 26 members of the Ways and Means Committee. The Senate bill, introduced by Sens. David Boren, D- Okla., and Bob Packwood, R-Ore., currently is co-sponsored by seven members of the Senate Finance Committee.
 Powell explained the tax provisions would likely be considered as part of budget reconciliation legislation. Unlike the economic stimulus bill recently held up in the Senate, a reconciliation bill is not subject to filibuster and cannot be delayed, he explained. Thus, action -- "either up or down" -- on any tax provisions in the reconciliation bill is certain, Powell said.
 The panelists predicted that the Senate and House would complete action on tax legislation by August.
 In addition to a favorable passive loss measure, the chances are "excellent" that a provision changing debt restructuring will be included in the final legislation, Morgan said. Under current law, the


amount of debt reduced in a loan "workout" with a lender is taxed as ordinary income, even though the debtor has received no funds. This policy discourages the owner from retaining the property; rather it encourages foreclosures, he said.
 The panelists offered little hope for action to lower the capital gains tax rate, which is currently 28 percent. They explained that action on this continues to be bogged down by a debate over whether a lower rate would trigger investment and raise tax revenue or if it would cause the U.S. Treasury to lose money. NAR has long supported a reduction in the rate charged on capital gains.
 Powell noted that the proposed increases in the income tax rate could leave upper-income individuals with a lower capital gains rate -- but only in the sense of being lower than their new income tax rate. For instance, if the rate for high-income earners is raised to 39 percent and the capital gains tax rate stays at its current level, this could be considered as a "lower" capital gains rate, he said.
 Prospects also are dim for consideration of a home buyer tax credit, or a measure permitting Individual Retirement Account funds to be used for home purchases, the panelists said. NAR strongly supports permitting IRA withdrawals to be used for home down payments. "There is great concern" over the amount of tax revenue that could be lost following enactment of such provisions, Powell said.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 750,000 members involved in all aspects of the real estate industry.
 -0- 4/26/93
 /CONTACT: Trisha Morris, 202-383-7560, or Liz Duncan, 202-383-1043, both of the National Association of Realtors/


CO: National Association of Realtors ST: District of Columbia IN: SU: LEG

MH -- DC033 -- 0932 04/26/93 16:19 EDT
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Date:Apr 26, 1993
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