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Columbus OH Real Estate News

by Jason Opland & The Opland Group

By Jason Opland | Agent in Powell, OH

Mortgage Forgiveness Tax Treatment for Short Sales Extended

As part of the fiscal cliff deal, Congress extended the cancellation of mortgage debt relief provision, also known as the Mortgage Debt Relief Act for one year, through the end of 2013. President Obama is expected to sign the legislation into law shortly. 

The law – which was set to expire at the end of 2012 - is crucial to foreclosure mitigation efforts such as principal forgiveness and short sales. Normally, U.S. law decrees that when a lender forgives all or a portion of a borrower’s debt, the forgiven amount is considered taxable income for the borrower. This is known as Cancellation of Debt (COD) Income and must be included in a taxpayer’s gross income. 

This Act, however, created an exception to this rule under the U.S. Tax Code. The Mortgage Forgiveness Debt Relief Act allows homeowners who received principal reductions or other forms of debt forgiveness to not pay taxes on the amount forgiven. The amount extends up to $2 million of debt forgiven on the homeowner’s principal residence. 

For homeowner’s to qualify, their debt must have been used to “buy, build, or substantially improve” their principal residence and be secured by that residence. The law, which was passed in 2007 with a five year sunset provision, will now be in effect until January 1, 2014.

If you're facing foreclosure you're facing some very important decisions. We want you know you're not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington

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