It could, for example, sharply reduce the value of the deductions you now routinely take for mortgage interest and property taxes.

It could eliminate the favorable capital-gains tax treatment you'd banked on when you bought that small piece of rental or vacation property.

But it could also leave you with more money in your pocket after taxes than you have under the present tax system--turning you into a tax-reform convert instead of a militant opponent.

Since you may not be watching Congress' tax games intently in the heat of the summer, here's a quick update on where the reform movement is headed, and what it means to owners of real estate.

First, although no one expects legislative action this year, don't sell the political strength of the "flat taxers" and the "tax simplifiers" short. They've got a concept with awesome potential popular appeal. No less than 10 bills already are pending in Congress, written by politicians ranging from the Republican right to the Democratic left. Full-scale Senate hearings are being set up on the proposals by Senate Finance Committee Chairman Robert Dole (R-Kan.) after the Labor Day recess.

Some of the bills on Capitol Hill, such as one introduced this week by Sen. Bill Bradley (D-N.J.) and Rep. Richard Gephardt (D-Mo.), are sophisticated attempts to rid the federal tax system of its Byzantine features, without penalizing any particular income group or reducing federal revenues.

The Bradley-Gephardt bill would set a basic 14 percent federal tax rate for all income earners, with three graduated "surtax" rates for higher-income taxpayers. The maximum rate for anyone, no matter how high his or her income, would be 28 percent. The rate paid by roughly 80 percent of American taxpayers--including the majority of its homeowners--would be just 14 percent.

Only a handful or preferential deductions in the current federal tax code would be retained under the Bradley-Gephardt plan, among them the home mortgage-interest and property-tax write-offs. Other "flat tax" bills in the hopper would cut rates to as low as 10 percent, but eliminate virtually all deductions and exclusions, including those for housing.

What homeowners and other investors in real estate need to know about these and additional proposals coming before Congress this fall are their net effects on property ownership. The reductions in tax brackets may be a boon for some, but they could be disastrous for others, and possibly for homeownership in general.

For example:

What would an across-the-board federal tax rate of, say, 14 percent, do to homeownership even with the retention of the mortgage interest and property-tax deductions? Part of the attractiveness of owning a home--and a key to the high price levels attained by housing--has been its tax-shelter value.

Cut the tax rate down to 14 percent and the effective cost of owning a home will be pushed up by thousands of dollars a year in many cases. Inevitably, the prices of houses will also be lessened.

The total income taxes paid by families living in these homes may be lower--a welcome relief--but so will the market resale value of their single largest asset.

What net effects will the elimination of the current 60 percent capital-gains exclusion have on real estate? Although the $125,000 exclusion for primary residences would be retained in modified (partially taxable) form under the Bradley-Gephardt bill, all other forms of real estate--including rental and commercial property--would be denied this key traditional investment tax-preference.

Capital-gains treatment is so ingrained in real estate that its disappearance, even phased out over time, could be a severe jolt to the American economy.

What other provisions in the current code that benefit real estate would be jettisoned, in exchange for lower marginal bracket rates? Tax benefits for historic building renovation, and for state and local low and moderate-income mortgage revenue bonds, for example, would be eliminated under the Bradley-Gephardt legislation.

Tax experts on Capitol Hill concede that any effort to rid the Internal Revenue Code of its tax loopholes is going to be painful to certain owners of real estate. The more real estate you own, and the more tax-shelter preferences you draw from real estate, they suggest, the less likely you'll be to come out ahead under the Bradley-Gephardt plan or other reform bills.

If you fit into that category, red lights should be flashing for you from Capitol Hill. Otherwise, take a hard, close look at the "flat tax" bandwagon. You might find it profitable to jump on board.

Kenneth R. Harney is publisher of The Harney Washington Report on Real Estate. With art by William T. Coulter