This post was a call to action for an extension of the Mortgage Forgiveness Tax Relief Act through 2014. We now need another extension to the end of 2015….because Congress couldn’t manage to extend this for more than one year last year.
If you or anyone you know is “under water” on their mortgage and has or might attempt to “short sale” their property with their mortgage provider we need you. The Mortgage Debt Forgiveness Tax Relief Act expired last December, 2013. Without this act homeowners are taxed on “phantom income” which is the amount that is forgiven by the bank and then reported to the IRS as income. Income that these homeowners never received, a tax that individuals who are short selling a home mostly can’t pay. The statement below is from the National Association of Realtors who has put out a call to action for individuals to pressure their representatives to pass this legislation now and to make it retroactive. This legislation has been passed by the House of Representatives and we now need the Senate to pass it as well.
In the US, there are more than 5 million homes “under water” and if Congress doesn’t act quickly, many of these home owners face an uncertain future.
Why? Congress has not yet extended the Mortgage Debt Forgiveness Tax Relief, which stops the IRS from treating mortgage debt forgiveness as income.
If Congress does not step in before the end of the year, these homeowners will face an inflated tax bill based on “phantom income” they did not actually receive. And if they can’t pay, they may be forced into foreclosure.
NAR urgently needs your help to push Congress to extend the “Mortgage Forgiveness Tax Relief Act.”
This bipartisan legislation would extend this expired provision that has helped millions of distressed American families by allowing tax relief for home owners when lenders forgive some portion of the mortgage debt they owe.
Today’s housing market is finally recovering but there are still too many homeowners unable to meet their mortgage obligations. If “The Mortgage Forgiveness Tax Relief Act” is not enacted, hundreds of thousands of American families who did the right thing by short-selling their home or received a much needed loan reduction from their lender will have to pay income tax on “phantom income.”
Urge your Member of Congress and Senators to act on “The Mortgage Forgiveness Tax Relief Act” before the end of 2014 and help provide certainty for struggling home owners and stability for our nation’s housing markets.
REALTOR® Party Director