Home Buying in San Jose>Question Details

Sam Shueh,  in San Jose, CA

Mortgage Relief Act Gets Extended for One More Year -SHORT SALE Options

Asked by Sam Shueh, San Jose, CA Wed Jan 2, 2013

‎01-02-2013 12:35 PM

Congress passed a bill yesterday, The American Taxpayer Relief Act of 2012 (Sec. 202) which extends the Mortgage Forgiveness Debt Relief Act through December 31, 2013.


This legislation extends dozens of other tax cuts that have expired or are set to expire at the end of the year, including one that extends homeowners’ ability to deduct the cost of mortgage insurance on a qualified personal residence.

Under the federal tax code, all types of forgiven debt are treated as income, subject to regular taxes. Because of the Mortgage Forgiveness Debt Relief Act, homeowners who get their mortgage debt forgiven through either a short sale or loan modification WILL NOT BE TAXED on the amount forgiven up to $2 million.

This law was set to expire December 31, 2012. If it hadn’t been extended, any forgiven amount of debt would be considered taxable income, which would be devastating for homeowners. This will expire on Dec 31, 2013

Sam Shueh, Keller Williams Realty

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Claudia Muller Gravelle’s answer
Another important part of this legislature, is the extension of the ability to write off mortgage insurance. This is very important for those buyers who have less than 20% down payment!
2 votes Thank Flag Link Wed Jan 2, 2013
It was absolutely mandatory that Congress pass an extension of the Mortgage Forgiveness Debt Relief Act and they did so. It would have been a cruel hoax if short sale sellers – also called distressed homeowners – had to pay income taxes on the amount of debt forgiven when they lose their house. Our elected representatives would have had a hard time going back to their home districts to face people who suffered financially because of their inaction.
1 vote Thank Flag Link Thu Jan 3, 2013
Thank you, Sam:

Without the effort of the California Association of REALTORS and the National Association of REALTORS the mortgage forgiveness debt relief act never would have been extended to December 31, 2013.

Thank you,
Charles Butterfield MBA
Real estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
DRE#00901872
.
1 vote Thank Flag Link Wed Jan 2, 2013
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