Time for Individual Income Tax Reform

We the undersigned hereby request the Congress of the United States of America to change the 2009 Individual Income Tax Law in order to let a homeowner who sells his or her primary home at a loss, deduct from his or her federal income tax the difference in dollars between the original purchase price of the home and the price at which the home owner sells the home.

Here are the facts that support our petition:

1. When the personal income tax law was written most of the houses were sold at a profit, having increased in value by at least 3% per year. Since 2008 the majority of houses are sold below the purchase price. According to the current tax law the IRS has not reckoned with the current real estate situation, and the law was not reformed in spite of the fact that home prices dramatically decreased in most states.

2. If there is a catastrophe like flood, vandalism you can deduct your loss from your taxes. If you own stocks, you can deduct your losses from your taxes. Even, if you accidentally lose your diamond ring you can deduct the loss from your income taxes. Why can we not deduct the loss between the purchase price and the selling price of our homes? Why can an economic crisis not be treated as a casualty loss? According to current tax law the destruction of property must be the result of an identifiable event that is sudden, unexpected, or unusual. An economic crisis should fit in this category. Why does the tax law waive tax on gains up to$ 500.000? Why does the government helps these people and not those who suffer during this period of economic crisis?

3. On first reading of the above suggestion the Congress probably would have doubts ‘maybe this reform would cut too much money from the federal budget’. Reflection should show that it would not.
First of all, the tax law reform would apply only to those homeowners who just sold or are going to sell their primary residence and they are willing to buy another one in the next couple of years.

If the lawmakers helped the home owners deduct their losses the real estate market would recover. There would be an increased demand for jobs because of a need for repairing and remodeling. This change in the tax law would also effect the banking sector, the auto, furniture, appliance makers, and restaurants as well.