Since 2007, that law has given homeowners an exemption on federal taxes when they obtain debt forgiveness on their primary home. For example, a family with a short sale for $100,000 less than their mortgage would otherwise have to pay taxes on that difference as if it were income. It also applies when lenders forgive a portion of mortgage principal without the home changing hands as in the case of a loan modification.
Without this tax exemption, some homeowners might choose to lose the home to foreclosure instead of facing a large tax bill; although that could come with other penalties.
The Mortgage Debt Relief Act will last until Jan. 1, 2014. It only applies to first homes.
This extension will help struggling homeowners that are unable to make their payments on their mortgages and give them the ability to proceed with a Short Sale rather than letting the property go into foreclosure.
Senate version of the bill: H. R. 8
It appears that the Mortgage Debt Relief Act of 2007 will be extended for one year. Usually cancelled debt is considered income, but a provision of the Debt Relief Act allowed borrowers "to exclude certain cancelled debt on [a] principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief." (excerpt from IRS).
Here is the text from H.R.8:
SEC. 202. EXTENSION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.
(a) IN GENERAL.—Subparagraph (E) of section 108(a)(1) is amended by striking ‘‘January 1, 2013’’ and inserting ‘‘January 1, 2014’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to indebtedness discharged after December 31, 2012.
This is helpful for foreclosures, mortgage modifications, and for short sales (so the seller can sell the house for less than is owed, and not have to pay taxes on the debt forgiveness). This provision had wide bipartisan support and was expected to be included.
Read more at http://www.calculatedriskblog.com/2013/01/tax-bill-cancelled-mortgage-debt-relief.html#EhWrxVgSAM3kt21R.99
Mark Slade
Keller Williams
917.797.5059
Good Homes
Selling a Maplewood/South Orange/Millburn/Short Hills area home involves many steps and having an experienced Maplewood New Jersey Real Estate Agent and Realtor®, specializing in the Bedroom Communities of New York City in Essex/Union County— Millburn, Short Hills, Montclair, West Orange, South Orange, Livingston, Maplewood, Springfield, Summit, Madison, Chatham, Scotch Plains, Fanwood, Cranford and Westfield--by your side will make the transaction run a lot smoother. I would love to be your Maplewood/South Orange New Jersey Area Real Estate Professional! I assist both buyers and sellers in the Bedroom Communities of New York City, mostly served by NJ Transit’s Mid-Town Direct Train Lines, offering commutes of 45minute or less to NY Penn Station, with either the purchase and or sale of residential real estate.
As an Accredited Buyer’s Agent (ABR), I have received special training to guide and educate you through the entire home buying process. From start to finish, I listen to your needs and desires in what you would like and take the information you give me to find you home. My GO-TO team can provide you the best in Real Estate advice with regard to attorney choices, Home Inspectors and Mortgage Loan Officers
As your Maplewood/South Orange/Millburn/Short Hills/Essex/Union County New Jersey listing agent I am well versed on as your local expert in all things in the Maplewood and South Orange area Real Estate Market. You can expect personalized service that includes a detailed consultation on how to best position your Mid-Town Direct home to be competitive in today’s market with training to provide my clients with an in-depth Advanced Comparative Market analysis, and advice on staging. As my office’s technology officer as well as both a Zillow Platinum Premier and Trulia Premier agent, I use the latest and most up-to-date marketing methods to get your home in front of as many buyers as possible. Being your New Jersey Real Estate Agent and Realtor ® not only involves just finding the home or selling the home, but being your guide, negotiator, advisor and advocate and making sure that your needs and goals are met. Being your New Jersey Essex/Union County area Realtor® (with a little bit of Morris County thrown in for good measure) is one of my truest passions, and “Helping You Find Your Dream Home” is my number one priority.
Mark Slade
No comments:
Post a Comment