Mortgage Debt Relief Act Extended through 2013
The House of Representatives has voted to extend The Mortgage Debt Relief Act until 12/31/2013, giving underwater homeowners another 12 months to get out from under their upside down homes and mortgages without incurring a federal tax liability. The extension was included in the passage of the so-called “fiscal cliff” legislation.
Short sales, foreclosures and principal reductions done via loan modifications are all considered “debt forgiveness” and are therefore typically taxed as ordinary income. The Mortgage Debt Relief Act excludes homeowners from having to pay the tax on debt forgiveness on their primary residence.
The extension of this legislation will likely cause a wave of short sales as homeowners rush to get their short sales completed before the end of 2013.
The Battiata Real Estate Group specializes in lender approved short sales and has completed more short sales than virtually any other agent in California. They can be reached at 760-930-9898 or online at Battiata.com.