The Senate approved an extension of the Mortgage Debt Forgiveness Act by a wide margin last week, bringing home owners who did a short sale this year one step closer to tax relief. The bill, which passed the House of Representatives two weeks ago, is expected to be signed by President Barack Obama.
The Senate approved the bill in a 76-16 vote.
“This has been a long awaited decision since the Mortgage Debt Relief Act expired at the end of 2013. It’s important for all of our current, past, and future short sale clients to keep up-to-date with what is happening with this bill. If it passes, then sellers of short sales in 2014 will NOT be taxed on the “income” they received in the short sale. Per the 1099c sent out by the short sale lender, the deficiency between the amount that was owed to the bank, and the net proceeds the bank received in the sale, is considered income to the seller. Thus this bill will bring relief to any short sale seller of 2014 come tax time,” said Lauren Sage, DeSelms short sale processor. “Please feel free to give DeSelms Real Estate’s short sale processor a call if you have any questions or want any more literature on this subject. ”
To read the full story from the National Association of Realtors, go here.