Buried in President Obama’s $3.8 trillion budget for fiscal year 2013 is an important item for anyone connected to the real estate industry (which includes everyone, unless you live in a van): The President wants to extend the Mortgage Forgiveness Debt Relief Act of 2007, which is set to expire at the end of this year, through 2015.
This is sensible, and probably inevitable. Ending the Act now would be devastating for a housing industry still trying to regain its legs. But it’s especially significant for homeowners considering short sales. Let’s face it: If someone is thinking about a short sale now, they may not complete it before next year. What incentive would they have if they knew any forgiven debt would be subject to taxation? Not much.
This is good news for them—and for the agents trying to help them. You can include this in your narrative pointing out the advantages of a short sale over other options.
If you can’t remember what the Mortgage Forgiveness Debt Relief Act actually does, don’t beat yourself up: There’s been such a blizzard of new laws, programs, regulations and rulings lately that it’s hard to keep it all straight. So, here’s a good source (the IRS)
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