The House of Representatives has passed a bill that would provide relief to homeowners facing the threat of taxes on their foreclosed homes in the midst of the subprime mortgage meltdown.

The bill passed by a 386-27 margin and would allow taxpayers to avoid taxes on the forgiven portion of their mortgage debts. The Internal Revenue Service has considered the forgiven debt to be taxable.
President Bush issued a statement praising the bill but urged the Senate to consider it as a temporary measure.

House Ways and Means Committee Chairman Charles Rangel, D-N.Y., also lauded passage of the bill. "I am happy that Congress came together to give bipartisan support for this common sense bill to help alleviate the pressure American families are feeling due to the subprime mortgage crisis," he said in a statement.

The measure is expected to reduce government tax receipts by $650 million, but would be offset by provisions that tighten requirements to get tax breaks for the sale of a second home used as a vacation home or rental property.