Well, that didn’t take very long. Within 24 hours of the Senate’s late-night New Year’s Eve passing of the “Fiscal Cliff” bill, House Republicans caved, and passed the Senate version of the Fiscal Cliff bill, which extends the Mortgage Debt Relief Act of 2007 through the balance of 2013.
As originally reported by the National Association of Realtors, short sale agents and sellers should breath a sigh of relief due to the extension. This will extend mortgage debt forgiveness relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender, typically in a short sale, loan modification or deed in lieu transaction. Without the extension, any debt forgiven would have been taxable. For distressed households this would have added insult to injury and resulted in a large tax bill.
Also, Congress retained the mortgage-interest tax deduction and the PMI tax deduction. Overall, a very good result for the real estate industry!
Richard D. Vetstein, Esq. is a Massachusetts real estate attorney who writes frequently about new legislation concerning the real estate industry. He can be reached at firstname.lastname@example.org.