Feb 26, 2013
Mortgage Forgiveness Debt Relief Act Extended Thru 2013
The Federal Government extended the Mortgage Debt Relief Act of 2007. Tax relief under this law was intended to be temporary lasting through the end of 2012; however, Congress has elected to extend this benefit thru 2013.
Homeowners who are still upside down on home mortgages may now complete short sales or modifications resulting in a portion of the debt been written off without worrying about the tax ramifications. Home owners with deficiency balances written off after foreclosures also benefit from the extension of this law.
This is good news for Florida homeowners as short sales and foreclosures are still a large section of the home market. Many homeowners still under-water with mortgages can now seek resolution thru foreclosure or short sale without the added burden of paying taxes on the debt write-off.
Under normal circumstances the Internal Revenue Service classifies any debt that is written off as taxable income.