Mortgage Debt forgivness extended to the end of 2013 for Clintonville

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Real Estate Agent with Keller Williams Capital Partners Realty 277320
https://activerain.com/droplet/NPt

Mortgage forgiveness tax treatment gets one more year As part of the fiscal cliff deal, Congress extended the cancellation of mortgage debt relief provision for one year, through the end of 2013. President Obama is expected to sign the legislation into law shortly. The law – which was set to expire at the end of 2012 - is crucial to foreclosure mitigation efforts such as principal forgiveness and short sales. Normally, U.S. law decrees that when a lender forgives all or a portion of a borrower’s debt, the forgiven amount is considered taxable income for the borrower. This is known as Cancellation of Debt (COD) Income and must be included in a taxpayer’s gross income. This Act, however, created an exception to this rule under the U.S. Tax Code. The Mortgage Forgiveness Debt Relief Act allows homeowners who received principal reductions or other forms of debt forgiveness to not pay taxes on the amount forgiven. 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 five year sunset provision, will now be in effect until January 1, 2014.

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Rainmaker
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Sam Miller
RE/MAX Stars Realty - Howard, OH
Knox County Ohio Real Estate Specialist

Joe, This should be very good news and helpful for many. 

Jan 02, 2013 08:16 PM #1
Rainer
46,456
Linda Franks
Keller Williams Capital Partners Realty - Columbus, OH

This is vital for so many people who have run into some very hard times.  Being able to assist clients with their short sale is an emotional time, and for them to not have to worry about additional taxes they can't afford is wonderful.

Jan 02, 2013 09:42 PM #11
Anonymous
Erik

This extension is vital for those homeowners who were victims of the market crash. They didn't do anything wrong, but their home prices fell dramatically along with any equity in place. I do like the fact that the for them to qualify they needed to use the debt on their principal residence as there were many people who pulled equity out of their homes to purchase cars, vacations and other material items having nothing to do with their home. 

Jan 02, 2013 10:40 PM #12
Rainmaker
2,037,668
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This could help short sales and keep more homes out of a full foreclosure process

Jan 03, 2013 03:55 AM #13
Rainer
11,207
Tamisha Beedy
Keller Williams Capital Partners - Columbus, OH

This was absolutely the right thing to do for all Americans. If they had allowed this act to expire it could have caused more damage to communities all over and could derail the fragile incline we are seeing in the housing market. We just need to keep things moving in the recovery direction.

Jan 03, 2013 05:00 AM #14
Anonymous
Michelle Smith

Joe,

 

I was so glad to hear this news as I work with alot of short sale sellers today! Thanks for sharing this important information and Im going to pass it along!

 

-Michelle

Jan 07, 2013 01:47 AM #15
Rainmaker
2,037,668
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This will be helpful ofr the Clintoville home market in 2013

Jan 07, 2013 04:08 AM #16
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Joe Jackson

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