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Will The Mortgage Debt Relief Act of 2007 Be Extended?

A Much Need Extension To A very Important Act.

 

"The Mortgage Debt Relief Act of 2007" 

The Mortgage Forgiveness Debt Relief Act of 2007 expiration is scheduled for the end of the year.  The legislation ensures that homeowners who received principal reductions, or other forms of debt forgiveness, on their primary residences, do not have to pay taxes on the amount forgiven.

This act is so important in today’s housing market. Without the act, the debt reduced through mortgage modifications or short sales qualifies as added income to the borrower and is taxable.

IF the legislation is not extended, then it would require homeowners to complete their short sale or modification prior to the year’s end to avoid tax consequences.

.........In February, DSNews reported:

“Obama’s FY2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007…

http://www.deadlinenews.com/2012/02/21/obama-budget-proposes-mortgage-debt-relief-act-extension/

In the Treasury’s Green Book, its summary explanation of the administration’s budget proposal, it calls for an extension of the tax break due to “the continued importance of facilitating home mortgage modifications.”

The administration is proposing an extension that would apply to any amounts forgiven before January 1, 2015.”

In today’s political environment, the passage of any budget proposal could be considered doubtful. However, both parties seem to be in agreement that this provision should be extended.

 

Rep. Charles Rangel [D-NY15] Sponsored the Act:

http://www.govtrack.us/congress/bills/110/hr3648#

 

Ten Facts for Mortgage Debt Forgiveness:

http://www.irs.gov/newsroom/article/0,,id=205004,00.html

 

Below, a short video, with President Bush when he signed The Mortgage Forgiveness Debt Relief Act of 2007:

http://georgewbush-whitehouse.archives.gov/news/releases/2007/12/20071220-3.wm.v.html

 

The Making Home Affordable site:

http://www.makinghomeaffordable.gov/Pages/default.aspx?gclid=CJ-1u7eb3bACFcdlOgodtX06wg

 

If you need to seek help with your own lender, most Banking/Mortgage lenders now have informational links posted on their individual web-sites, too.

*As with all tax issues, it is strongly suggested you consult with your accountant to find out how this may impact you and your family.

 

 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Linda L Manning-Koziatek, REALTOR, LSA, CSA January 03, 2013 at 09:39 AM
Mortgage Debt Forgiveness Extended to 2014 - Congress Extends the Cancellation of Mortgage Debt Relief Provision for 1 Year. As you know the final act by the 112th Congress was to avert the ‘fiscal cliff’ and as part of the fiscal cliff deal Congress extended the cancellation of mortgage debt relief provision for 1 year, through the end of 2013. This is good news for any homeowner who is underwater and needs to sell a property, but was worried about the tax implications of a cancelled debt. Information about the Mortgage Debt Forgiveness Act can be found on http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation (the news is still very new and the IRS will need time to update their website, but the original information is available on this link).

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