Tax Relief for Already Troubled Homeowners?

Whenever real estate is sold, whether in a standard transaction, a short sale or a foreclosure auction, there were potential consequences for the seller.  The seller may still have owed taxes to Uncle Sam.

The U.S. House of Representatives voted early in October to give tax relief to already troubled homeowners.

The Mortgage Cancellation Tax Relief Act, H.R. 3648, directs the IRS to stop counting as income any mortgage debt forgiven by lenders during a workout or after a Short Sale.

Considering all the homeowners who could face loan repayment problems, the relief would come at a welcome time.

The bill would tweak capital gains tax rules on the sale of second homes, to offset the approximately 2$ billion in revenue the federal government expects to lose from this and other changes.