The Mortgage Forgiveness Debt Relief Act extends mortgage cancellation relief for home owners and sellers through disallowing taxes on the portion of their mortgage debt forgiven by their lender.
As short sales continue to be a part of our housing market, the extension is important in helping the real estate market recover.
According to RealtyTrac Vice President Daren Blomquist, the increase in short sales and distressed properties showed that “both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure.” If this had not been extended it would have hurt many homeowners. They would have been taxed on the unpaid loan balance, which would create a greater burden on many homeowners trying to do the right thing.
With this recent extension, if you are a home owner interested in a short sale for your home, you now have until December 31, 2013 to benefit from the reduced taxes provided by Mortgage Forgiveness Debt Relief Act.