With the House and Senate back on Capitol Hill for the lame-duck session, preliminary negotiations aimed at keeping the country from careening off the “fiscal cliff” have begun. The macro issues – how to reduce federal spending and raise revenues – are getting the bulk of the attention. But buried away in the discussions are bread-and-butter questions that could affect millions of homeowners and buyers:

• Will the biggest housing-related tax benefits – for mortgage interest, property taxes and home-sale capital gains exclusions – be on the chopping block? Or will these popular, multibillion-dollar annual supports for homeownership be deferred for the big game – the “grand bargain” negotiations involving a wholesale transformation of the tax code in 2013?

• Could Congress fail to extend the Mortgage Forgiveness Debt Relief Act before its expiration Dec. 31, potentially exposing large numbers of owners who receive cancellation of unpaid principal balances on their loans to punitive income taxes on the amounts forgiven?

• Will smaller-scale deductions for mortgage insurance premiums, energy-conserving home improvements and tax credits for builders who construct energy-efficient new houses be renewed? Or could they become poker chips that “pay” for other concessions to real estate interests?

The betting among lobbyists and other analysts is that it’s unlikely a still-fractious Congress will be able to pull off a major rewrite of the tax code during the lame-duck session. As a result, the big-ticket housing preferences such as the mortgage interest deduction – a nearly $100-billion-a-year revenue drain for the Treasury – would not be an action item this year, although agreements in principle could be forged to limit them in some way, with details to be worked out in 2013.

But cutting back on housing preferences will be a bruising fight on Capitol Hill, where powerful groups such as the National Association of Realtors and the National Association of Home Builders view them in almost existential terms. Plus any changes to the write-offs would need to be phased in over an extended period of years, given the important role housing plays in the economy.

Renewal of the mortgage debt forgiveness legislation may well be the most time-sensitive issue affecting homeowners. If it expires at the end of the year, owners who receive principal reductions through loan modifications, short sales or foreclosures by lenders next year could face painful tax bills: The IRS would treat their debt cancellations as ordinary taxable income.

Michelle Adams, an attorney in Rockville, Md., with a large practice assisting distressed borrowers, said that “for some homeowners the amount forgiven is a couple of hundred thousand dollars.” If Congress lets the provision lapse, “the amount (owed in taxes) will be so prohibitive that many owners will walk away” – or file for bankruptcy, she said. Under the tax code, most forms of forgiven debt are treated as ordinary income – with the temporary exception of mortgage debt on principal residences – unless the borrower is insolvent.

Carrie Johnson, senior policy counsel for the nonprofit Center for Responsible Lending, says allowing expiration “would be inconsistent” with other efforts, including Fannie Mae’s and Freddie Mac’s short sale program, the $25 billion “robo-signing” settlement with major banks, and private loan modification programs run by lenders; all encourage principal cancellations.

Lobbyists say there is a slightly better-than-even chance Congress will extend the debt forgiveness provisions.

Could some of the other housing issues – energy-conservation and mortgage insurance premium deductions especially – get sidetracked? Absolutely. Though the Senate Finance Committee approved a bipartisan bill to renew these and dozens of other tax code preferences in August, it never came to a vote in the Senate and its fate is uncertain. Since neither of the housing extensions is weighty enough to pass on its own, they will need to be included in a much larger omnibus bill.