On Tuesday January 2nd, 2013, Congress approved the budget which included extending the Mortgage Forgiveness Debt Relief Act through December 31, 2013. Prior to 2007, if a homeowner were to “short sale” their principal residence for less than they owed on the mortgage, they would be require to pay income tax on the “forgiven” mortgage debt. However, with the extension of the Mortgage Forgiveness Debt Relief Act, homeowners are excused from paying this tax on their principal residence through the end of 2013.
Homeowners can rest assure now knowing that any forgiven mortgage debt will not be taxable through the end 2013. Experts say it is unlikely for this Act to carry into 2014, so if you are considering a short sale, now is the time to act.
Learn more about the short sale process, conditions of a short sale, and where you can get help in John Rothamel’s article here. Bratton Scott attorney fees are paid by the homeowner’s lender, so attorney representation through the negotiations is at no cost to the parties