Many Military Families are caught "holding the bag" in this very difficult housing market. Uncle Sam sends you PCS orders and you are forced to sell in a down market and bear the loss, which can be substantial. We continue to advocate a Military Safety Net program that protects families in this situation, but we realize that it may be a long time coming. However, it would be a "relatively" simple thing to do to allow these Military Families to write off the loss against their income tax. It would offer some relief and certainly seems like the "right thing to do." VR SAM would be interested in your views on this. Thanks.

I'm just wondering how this write-off would work. I know that when I itemize my deductions, only a percentage of that goes against the tax we've paid. It's not a straight out, "you're claiming $15k in deductions, you get $15k back as a "refund". No. We don't get back more than we've paid in income tax! So how would a write-off work when you're facing a loss that is more than a year's income (let alone taxes paid)!?! Would we get to carry over the loss into future years (for the next 25 years)?

Sei,

First, this is just a proposal that we hope "takes legs." We believe it should be a "tax credit" as opposed to a "tax deduction."

A credit would be a reduction in your overall tax liability that equalled your loss, whereas a deduction would result in only a reduction of your taxable income and result in recouping only a percentage of the loss.

From a fairness perspective, a credit makes more sense as the loss truly is an expense incident to your employment by the government. And in an enviornment where we are trying to stimulate the economy...it makes even more sense!

However, based on the government's track record, if they were to implement such a program, it would come with a maximum cap on the credit.

Write your elected officials today! see: www.moresam.net for a prewritten letter and Congressional addresses

Joe

Of course a tax deduction or tax credit (even capped) would be a great help! Right now, there is nothing in place to ease the tsunami of an impact selling at a 100K loss will have on our finances.

Agree...we may have to settle for baby steps, but it will all start with demanding it from our politicians! Joe

This may seem like a good idea but what about those of us who bought a house in August of 2006. It doesnt seem very fair for us who bought a month after the cut off date.

If you are referring to the stimulus package HAP, I couldn't agree more! I have already discussed this with one Army Major who settled on Jul 1, 2006...missing it by one day. It was an arbitrary date chosen in haste just to get this package on the street. There are a lot of problems with the law as written and I strongly encourage you to write your Congressmen / Senators. Prewritten letters at www.moresam.net.

Joe Gladden

I would like to pass along some information I came across. From what I am reading this program may be more helpful than we think. This link has many questins answered and if you down load the applications and read page 2 even more.


http://hap.usace.army.mil/FAQs.html

I was suprised to see that the package is covering te realtor and closing costs. And after looking at the actual application it looks like there is a provision where to government will also just assume the mortgage. I read this on the actual application. I could not cut and paste you will have to download and read it. However, we are going to apply and get to ball rolling. The actual details are going to be out until mid April but at least our hat is in the ring in case the program is better than it sounds now. I will be interested to see what Joe reads into it.



Benefits
Private Sale
Eligible applicants may be compensated for the difference between 95% of the appraised fair market value of the property prior to the announcement date, and the appraised value of the property at the time of sale, or the sales price, whichever is greater. Closing costs are reimbursed for private sales.

Government Purchase
An eligible applicant may elect to sell the property to the government and receive, as the purchase price, an amount not to exceed 75% of the appraised fair market value prior to the date of the announcement, or the current total amount of outstanding mortgages, whichever is greater.

Foreclosure Assistance
If foreclosure proceedings have commenced, an applicant may elect to receive foreclosure benefits or private sale benefits. Foreclosure benefits may be paid directly to the applicant to reimburse for foreclosure costs paid by the applicant, or paid to third parties on the applicant’s behalf.

NOTE: Eligible HAP applicants who work at overseas installations announced for closure or realignment may receive only private sale benefits. Government purchase benefits are not available at overseas installations.

How HAP assists you
HAP provides assistance in four ways. For eligible applicants, the Government may:

Reimburse you for part of your loss from selling your home.
Assist you, if you don’t have funds from the sale of your home to pay-off your mortgage.
Purchase your home by paying off the mortgage.
Help, if you default on your mortgage.

Michelle,

Thanks for you comments / inputs. I agree that it makes perfect sense to get the application going. I have spend considerable time on that site and talked to the Corps of Engineers folks, who are understandably cautious about commiting to any specific policy until DOD guidance is received.

I believe the application you are seeing is actually the application that has been used in the past for the BRAC related HAP. From reading the final language, which is sort of like reading a foreign language, it appears that the "assumption" option actually goes to 10% of the appraised value...which is better than the 75%. However, if you follow the math in their $100,000 example, and apply that to more expensive homes, the losses can still be staggering. It will ultimately come down to how they do the appraisal and how they define "primary" residence for a lot of folks.

In the final analysis, if you qualify, it makes sense to apply, hope for the best, and take what they give. Based on what I have read and folks I have talked to, and the unsuccessful previous generic (ie. non military) relief / assistance of programs of the past 18 months, I am afraid that many folks are going to be disappointed. Let's hope I am way wrong! I don't think Military Families should lose a dime when asked to relocate in the service of our country.

It remains my absolute conviction that PCS moves are an employer expense, and that the government should offer the same benefits to Military Families who make tremedous sacrifices in the defense of our country, the same benefits they offer to other Federal Agencies. It is the only responsible and right thing to do!

I certainly encourage you to share everything you learn as you go through the process on this forum! Thanks! And thanks to you and your family for serving!

Joe

Certainly understand your frustration.  Can't tell you how many letters we have written.   Very few actually reply and those that do are almost always very generic, form letters.    Our Military Members deserve better than that.  I also encourage phone calls and when possible, visits to their office.    As frustrating as this is I encourage everyone to not give up and keep the pressure on these guys. 

 

Joe