The Mortgage Forgiveness Debt Relief Act was introduced by congress in 2007 as a tool to protect distressed homeowners. A deficiency from a home sold as a short sale is considered taxable income by the IRS. For example, if a homeowner owes $200,000 and their home sells for $150,000, the $50,000 written off by the bank is like an invisible check made payable to the homeowner. Before this act was introduced, a homeowner would be expected to pay taxes on that amount.
The Mortgage Forgiveness Debt Relief Act first expired at midnight, December 31, 2012 and has since been extended by congress through the same date in 2013. Now set to expire on New Years Eve, the question on everyone's mind is, "Will congress extend the act yet again?"
June of this year, a Michigan senator introduced a bill, along with co-sponsor, California Senator Barbara Boxer, to extend the act through 2015. The decision congress makes is very important to the future of short sales and piece of mind for distressed homeowners.
You can read the entire bill here.
You can also check the bill's status through congress here.
If you would like more information do not hesitate to contact MonkeySold.
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