The Mortgage Forgiveness Debt Relief Act Extended Through 2013
Congress has voted to extend The Mortgage Forgiveness Debt Relief Act of 2007. This act allows taxpayers to exclude income earned from a discharged debt on their principal residence, etc. Without this act, debt that has been forgiven under short sales or loan modifications would possibly be treated as taxable income. However, if the debt was discharged in bankruptcy then it would not be a taxable event.
For a homeowner that is already struggling, having to pay taxes on a short sale property or loan modification would be akin to “pouring salt on an open wound.” In all likelihood, the current housing recovery would have slowed significantly if the The Mortgage Forgiveness Debt Relief Act were not extended. Continuing the relief that the Act provides will likely spur more short sales and hopefully speed up the recovery of the housing market.
If you have questions about this or other legal issues, call The Law firm of Vaughn and Weber at 516-858-2620 today to schedule a free consultation. We are located in the heart of Long Island at 393 Jericho Turnpike, Suite 208, Mineola, NY 11501.
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