Mortgage Debt Tax Relief Passed

As a great benefit to anyone needing to short sale or otherwise being foreclosed on the congress has extended the mortgage debt tax relief act for another year.  If you are thinking you may need to participate in a short sale, I would suggest you call me and get started today. These things can sometimes take a very long time and you never know if it will be extended again.

DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 04, 2013

A tax break for forgiven mortgage debt that was set to expire Dec. 31 was extended by lawmakers when they dodged the “fiscal cliff” this week.

The tax break, which has been extended to the end of 2013, allows home owners facing short sales, reduced loan principals, or foreclosures to avoid paying taxes on any debt still owed to the bank. Otherwise, the debt would have been taxed by the IRS as income.

The tax break first took effect in 2007.

Home owners had rushed to complete short sales before the end of the year out of fear that the tax break would not be extended.

In Florida, short sales have sold on average for about $103,000 less than what the home owner owed. As such, a typical home seller in that state in, say, the 25 percent tax bracket who completed a short sale in 2013 would have been faced with a $25,725 tax bill if the extension had expired.