Short Sale Forgiven Debt Passes Congress for 2014......read below about this great information provided by
Ricard Richard Zaretsky, Esq.
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In a long expected vote by the House of Representatives, HR 5771 was passed today just after 3 pm ET. HR 5771 in section 102 provides for the extension of the presently expired Mortgage Debt Forgiveness Act, which expired at the stroke of midnight December 31, 2013. The law is now extended though December 31, 2014. Efforts to have the extension for 2 years failed. Interestingly the bill, introduced just days ago, was given a 10% chance of passage on Monday by Govtrack.US website.
Senate update December 16th - The Senate approved this bill and it is now on its way to the President for signature!
SENATE UPDATE 12/12/14 - Senate Majority Whip Richard Durbin, D-Ill., said today that the bill was being held to last because of disagreement over both “substance and timing.” However, Senate Finance Chairman Ron Wyden, D-Ore., said the Senate had no other practical option. “It's very hard to see a procedural path toward something else,” he told reporters.
Those who received forgiven debt in a short sale or deed in lieu of foreclosure or other forgiveness of debt on a primary residence in 2014 will now in most cases have no income tax to pay on that gain.
For example, if a mortgage of $250,000 was paid off with only $150,000 from a short sale, that would mean that the borrower would have a gain (income) of $100,000. If the taxpayer was in the 28% tax bracket, that would mean a $28,000 tax bill on that transaction on the individual's 1040 tax return that needs to be filed for 2014. Passage of this bill removes that tax bill.
Congressman Pete Sessions said in a statement:
WASHINGTON, D.C. – U.S. Congressman Pete Sessions (R-TX), Chairman of the House Rules Committee, today released the following statement regarding House passage of H.R. 5771, the Tax Increase Prevention Act of 2014:
“Today the House acted to prevent burdensome tax increases on millions of families and businesses across America. This piece of legislation provides much needed certainty to taxpayers as they prepare to file their 2014 tax returns and eliminates provisions in the tax code that no longer serve a purpose. I applaud the passage of this bill and look forward to continuing to work toward a simple, competitive tax code.”
Senate approval appears to be a sure thing as the matter passed with only 46 nays distributed about evenly between democrats and republicans.
We previously posted about this matter at: Realtor Call to Action – Forgiven Mortgage Debt Tax Exemption Expiring
This is huge for a large number of distressed homeowners that lost their homes to short sales and deed in lieu of foreclosure in 2014.
The Congressional minutes summary shows the following:
2:41:53 P.M. H. Res. 766 Considered as unfinished business. H. Res. 766 — "Providing for consideration of the bill (H.R. 5771) to amend the Internal Revenue Code of 1986 to extend certain expiring provisions and make technical corrections, and for other purposes, and providing for consideration of the bill (H.R. 647) to amend the Internal Revenue Code of 1986 to provide for the tax treatment of ABLE accounts established under State programs for the care of family members with disabilities, and for other purposes." 3:11:43 P.M. H. Res. 766 On agreeing to the resolution Agreed to by the Yeas and Nays: 231 - 192 (Roll no. 540).
© 2014 Richard P Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.
Richard Zaretsky, Esq., AUTOMATED LAND TITLE COMPANY and ZARETSKY LAW GROUP, ATTORNEYS AT LAW, 1615 FORUM PLACE, SUITE 3A, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com Website www.Florida-Counsel.com.
See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES