Senate bill contains an extension of the Mortgage Forgiveness Debt Relief Act

 

As it stood a few days ago, in 2012, struggling homeowners would not be responsible for paying taxes on any of the forgiven debt associated with a short sale, a foreclosure, or a deed-in-lieu of foreclosure (with certain qualifications). This IRS provision was set to expire on January 1st. But, the Senate, then the House, passed a bill with what a number of what lawmakers call extenders in the bill. Extenders keep in place expiring tax provisions. Of most interest to underwater homeowners, the bill would extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender, typically in a short sale (as described above) for another year… Without the extension, any debt forgiven would be taxable, which, for underwater households, would represent a huge financial burden.

For example, if the short sale lender forgives $200,000 in debt, borrowers would otherwise be responsible for paying the income tax (on the $200k) at their current tax rate…this could have been a huge tax hit!

Also extended are deductions for mortgage insurance premiums and for state and local property taxes, which, along with the mortgage interest deduction, are important tax considerations for home owners and buyers.

This is extremely important, if you have been undecided about moving forward with a short sale you just got a 12 month reprieve! Don’t wait too long this year. Some short sales can take quite a long time to complete, depending upon a multitude of factors.

If you think that there is even a slim chance of you doing a short sale to get our from under your mortgage…CALL ME TODAY, please!

We’ll confidentially discuss your situation and options, as well as how we have assisted numerous other families in your same situation.

Thanks for reading…Steve Jackson…561.602.1258