"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.
