[Congressional Record Volume 143, Number 37 (Thursday, March 20, 1997)]
[Extensions of Remarks]
[Page E533]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   NEW RETIREMENT OPTION FOR SENIORS

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                    in the house of representatives

                        Thursday, March 20, 1997

  Mr. THOMAS. Mr. Speaker, I am introducing legislation today that will 
allow older Americans to stay in their homes while taking advantage of 
the exclusion of up to $125,000 in gains on sale of a principal 
residence. This is a badly needed option for those who wish to use the 
equity in their home for retirement needs without having to leave the 
family home.
  An AARP survey shows that 86 percent of seniors prefer to stay in the 
family home, yet for a great number of older Americans, home equity is 
a major component of their savings. Seniors who need additional income 
in their retirement can face a troubling dilemma: they may have to give 
up the house to meet their needs.
  The bill will aid seniors by altering our approach to the $125,000 
exclusion. As currently interpreted by the IRS, the exclusion of 
$125,000 in gain is only available to seniors when they sell their 
homes and move away, literally forcing people to move to get the tax 
break. Their other alternatives--both of which allow them to claim the 
exclusion--are taking out a reverse mortgage or selling their home and 
leasing it back. Not all seniors will find these devices helpful. 
Reverse mortgages leave homeowners with the burden of maintaining the 
home. Sale/leaseback transactions may not provide seniors with the 
certainty that they will be able to continue occupying their homes.
  The bill's new alternative will permit seniors to sell the 
``remainder interest''--the right to future ownership--in their home 
and keep the ``life estate''--the right to use the house for the rest 
of their lives. Such an option does not qualify for the exclusion 
today.
  With all the concern about retirement savings, taxpayers can only 
benefit through the provision of additional options. I hope my 
colleagues will join me in making this option available as soon as 
possible.

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