J. Philip Faranda shares some great news in his post below on the extension of the mortgage foregiveness debt relief act! The “American Taxpayer Relief Act of 2012’’ passed on a bipartisan 89-9 vote in the middle of the night thereby extending the 2007 Mortgage Foregiveness Debt Relief Act which was due to expire.
In short, the bill extends mortgage cancellation relief for home owners and/or sellers who have a portion of their mortgage debt forgiven by their lender. Without the extension, any debt forgiven, typically due to a short sale or foreclosure sale would be taxable. Thus creating an additional financial burden for underwater househoulds.
Now we wait to see if the House of Representatives is on board. Many are confident that they are.
If you are facing foreclosure, help is available for New Jersey homeowners facing foreclosure.
You can all exhale. The Fiscal Cliff deal passed in the wee hours of last night extended the 2007 Mortgage Forgiveness Debt Relief Act which was due to expire at midnight. According to NAR, the American Taxpayer Relief Act of 2012 passed the Senate 89-9.
There was an awful lot of concern among real estate licensees and borrowers either in or considering a short sale that the tax ramifications of a short sale would change with the expiration of the 2007 law. The extension saw to it that anyone who has purchase mortgage debt forgiven in, for example, a short sale would not have the forgiven debt treated as taxable income.
There is always small print as to what qualifies, so all are encouraged to consult with their CPA, attorney or financial professional for specific advice, but the current law will continue unchanged, and that is good news.
This had been a big distraction and concern for the bulk of 2012. I am not happy about how long it took lawmakers to get their act together on this, but that is the climate we are in. The result is a happy one.
Special thanks to Fred Glick for being on top of this and keeping his colleagues in the know.
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