The federal tax break called the Mortgage Forgiveness Debt Act Relief applies to debt forgiven in calendar years 2007 through 2012.
The Mortgage Forgiveness Debt Relief Act is meant to save tens of thousands of dollars for homeowners that are selling their homes through a short sale or who are in foreclosure and allows taxpayers to exclude income from the discharge of debt on their principal residence. The Mortgage Forgiveness Debt Relief Act excludes that income from being taxed through Dec. 31, 2012.
There are only 4 months or 116 days left so if you need to short sale your property now is the time. After December 31, 2012 homeowners will have to pay taxes on any unpaid balance forgiven by a lender after a short sale or foreclosure.
A bill called the “Homeowners Tax Fairness Act” is asking for an extension on the tax debt forgiveness program through 2015 but that bill requires congressional approval.
Call Towns Realty today if you need to short sale your home or if you are in the early stages of foreclosure. There is still time to short sale your home. Our experience will help you avoid foreclosure.