Unfortunately, one of the bill's

most valuable provisions, the deductibility of private mortgage insurance

(PMI) and government-backed mortgage insurance, got cut in the final version.

It's a significant loss to the 10 million moderate income homeowners who

must make the onerous monthly premium payments, which can add up to thousands

of dollars a year.

Mortgage insurance is a requirement

for homebuyers making a downpayment of less than 20 percent. It protects

lenders against loss in the event a home buyer defaults on a home loan.

For years tax experts have argued that since lenders are the only beneficiaries

of mortgage insurance the premiums should be tax-deductible. The deduction

would have saved homeowners a bundle.

"Not only is this a disappointment

to existing homeowners. The ability to deduct the costs of mortgage insurance

would have had tremendous secondary benefits to prospective home owners,

as well" says Richard Roll, president of the American Homeowners

Association (AHA). "This deduction would have allowed some 300,000

families, who now rent, to qualify for a mortgage."

Making mortgage insurance costs

deductible had broad bi-partisan support in Congress. There is a strong

probability the issue will be taken up again by lawmakers.

Another tax relief measure

that affects homeowners, the capital gains rate reduction, did make it

into the final version of the bill.

Home sellers are taxed on the

profit they realize at the time they sell their home, except when they

take advantage of their one-time exclusion. As the result of changes in

the tax bill, now high-end capital gains taxes will drop to 15 percent

from 20 percent. Tax rates at the lowest end will be reduced from 10 percent

to 5 percent, enabling homeowners to keep more money in their wallets.

"In order for eligible

home owners to take advantage of these capital gains tax breaks, they

will need to sell before the end of 2008," Roll says, which is when

the provision is set to expire.

The capital gains provision

is set to expire in 2008, unless re-authorized by Congress.

[For more information on

any aspect of buying and owning a home go to www.ahahome.com, the website

of the American Homeowners Association (AHA).]