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Suzanne Macdowell's Blog

By Suzanne MacDowell | Agent in Mount Arlington, NJ


The Mortgage Debt Forgiveness Act is currently set to expire at the end of 2012.  Congress will be returning soon to take care of 'unfinished business'.  One of the issues on their agenda is extendiing this Act.  If they do NOT extend the act, homeowners in distress who short sell their homes will be required to pay income taxes on the forgiven debt.  On a home that is $100,000 underwater, if the homeowner's tax rate is 20%, that translates to a $20,000 tax liability, if their tax rate is 30% it becomes $30,000.  This is not an unusual scenario for middle and lower class homeowners in many areas of the country.

Personally, I don't see how on earth you can classify forgiven debt as income, but let's not go there.  The fact is if this act is NOT extended it will be the equivalent of kicking a person when he's down. It will be devastating.  These folks are suffering financially, if they were not they would be paying their mortgage and staying in their homes.  Believe me, the negative consequences of short selling, including the destruction of their credit rating which leads to increases in car insurance, auto loan rates, credit card rates and even the potential for being turned down for a job due to a bad credit report, are bad enough without adding a huge tax burden to boot.

Please join the me and the National Association of Realtors in urging congress to extend the Act.  You can use the link below to send a letter to your congress people encouraging them to extend the act.  And, if you can find the time, I would encourage you to call their offices as well.

I thank you and your fellow citizens in distress thank you in advance for your time.



By Timothy M. Garrity,  Sun Nov 11 2012, 08:31
Thanks for sharing this.

Timothy M. Garrity - REALTOR | http://PhillyUrbanLiving.com
By Helen Oliveri,  Sun Nov 11 2012, 08:43
Great blog!

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