Deadline Is Looming For Certain Mortgage Tax Deductions
Just as the housing market is starting to improve certain mortgage forgiveness deductions are set to expire Jan 1, 2013. What that means is that borrowers who negotiates a reduction in principle balance, short sale, loan modification or foreclosure will be taxed on the forgiven amount as ordinary income. Currently the forgiven amount is exempt from federal taxation.
An extension of the Mortgage Foregiveness Relief Act and Debt Cancellation is a possibility but no guarantees being that Congress has some big fiscal issue's to deal with after November. Lobbyiest for the National Association of Realtors are pushing to have the deduction renewed. The Mortgage Foregivness Relief Act has given borrowers a reason to negotiate verses just walking away.