The Mortgage Forgiveness Debt Relief Act that was passed back in 2007 has been extended by congress until the end of 2013.
One of the major advantages to Las Vegas homeowners selling their home on what is known as a “short sale” is not only being forgiven of the debt incurred when a home is sold for less than what is owed to the lender, but not being taxed on the sale.
If the Debt Relief Act had not been extended many distressed sellers would have incurred a tax liability from the short sale process. As an example, if the home were sold for $150,000 but $300,000 was still owed on the mortgage, the seller would have been taxed on the $150,000 difference.
With the extension of the act until the end of the year distressed homeowners in Las Vegas (and elsewhere) can still benefit from a short sale as a much better alternative to the traditional foreclosure process.