The House was heading toward easy passage Thursday of a bill designed to soften the tax burden on struggling homeowners.

Under current law, homeowners who have some of their debt forgiven through foreclosure, sale or a restructuring of their mortgage must count that amount as income and pay tax on it. The bill would eliminate that tax.

One of the most common circumstances occurs when housing prices drop, leaving the homeowner owing more than the value of the house. In that case, the foreclosure or sale does not generate enough money to pay off the loan, and the remainder of the debt is forgiven.

The bill (HR 3648) “eliminates an unfortunate tax bill should they lose their homes,” said said Dennis Cardoza, D-Calif., the bill

The change would apply retroactively for all of 2007, and it would be limited to $2 million.

The bill echoes an August proposal from President Bush, and the administration announced its support earlier this week. Bush, however, would prefer a temporary change and one that is not offset.

The offsetting revenue for the bill would be generated by changing the tax treatment of vacation and rental homes. Under current law, homeowners can exclude $250,000 of capital gains ($500,000 for married couples) from selling a home, if they have claimed it as their principal residence for at least two of the previous five years.

The change would affect people who own vacation and rental homes, move into them and then sell them. Instead of being able to claim the full exclusion, these homeowners could claim the exclusion only for the percentage of time they claimed the house as their principal residence.

That calculation applies prospectively, to the period starting Jan. 1.

Some Republicans expressed concern that the change would hurt the real-estate markets in coastal and mountain areas heavily populated with vacation homes.