You purchased a home years ago. You did it the right way – made a healthy down payment and didn’t reach for more than your paycheck could manage. You’ve been on-time with that mortgage every month.
But then, someone got sick. Or you lost a job. Now you’re forced into a short sale – selling your home for less than what you owe.
N.C. Republicans want to tax your misery.
As the News & Observer’s Colin Campbell reports, the N.C. House voted Tuesday for a bill that calls for taxes on all “income” homeowners receive from a short sale. It’s yet another example of Republicans punishing the vulnerable in our state, often at some of the most painful times in their lives.
A quick explainer: A short sale happens when you and your lender realize you can’t pay your mortgage or sell your home for a price that allows you to pay off the loan. That can be an unfortunate reality for those who live in the many N.C. communities in which homes haven’t appreciated.
So instead, the lender agrees to let you sell it at a price less than what you owe. For example, if you owe $200,000 on your home, the bank can agree to let you sell it for $180,000 and call everything even.
That extra $20,000 is considered “income” although you never see a dime of it. The federal government doesn’t tax you on it, because you’re not really making any money you can keep. Also, if you’re in the position of having to do a short sale, there’s a good chance you don’t have the money to pay those taxes.
N.C. Republicans don’t seem to care about that. In the debate over short sales taxes this week, Rep. Jeff Collins of Rocky Mount noted that he wouldn’t get a tax break if he sold his home today. “A lot of us did the right thing and paid our bills and did not ask the government to bail us out,” he said.
Recognize that? It’s the same pious tone Republicans took back in 2013, when North Carolina was the first state to cut federal benefits for the unemployed. It’s the same blame-the-victim tenor we hear whenever Republicans want to look tough by adding new burdens to those receiving public assistance.
Each time, the rationale is the same: There are lazy people out there taking advantage of the government. But sometimes – even most of the time – people do things the right way. They work. They pay bills. They get by, until something awful happens. It’s not a character flaw. It’s life. We shouldn’t punish them even more for it.
Peter St. Onge