Mortgage Forgiveness Debt Act Extended Thru 2013
Congress reached a settlement in the “fiscal cliff” negotiations. As a result, the Mortgage Forgiveness Debt Relief Act has been extended through Jan.1, 2014. The fiscal cliff deal extends it for another year; meaning homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.
The amount extends up to $2 million of debt forgiven on the homeowner's principal residence. For homeowner's to qualify, their debt must have been used to 'buy, build, or substantially improve' their principal residence and be secured by that residence. The law, which was passed in 2007 with a 5-year sunset provision, will now be in effect until Jan. 1, 2014.
The settlement also will allow capital gains rates to rise from 15 percent to 20 percent for high-income earners. However, capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.
This is such good news for the public who are thinking about doing a short sale. Call me if you live in Riverside or San Bernardino County. I can assist you to sell your home so Call Me at 909-557-6966.
Mortgage Forgiveness Debt Act Extended Thru 2013
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