Suzi Karr Realty reports Congress has extended the Mortgage Forgiveness Debt Relief Act through December 31, 2013. The Act relieves distressed homeowners from having to pay income taxes on the mortgage debt forgiven in a short sale, foreclosure, or principal reduction.
Congress passed a bill, The American Taxpayer Relief Act of 2012, as part of a deal to avert the so-called fiscal cliff. This legislation includes extending the Mortgage Forgiveness Debt Relief Act through December 31, 2013. The law impacts homeowners who are granted principal forgiveness on their loan, due to a short sale, a deed-in-lieu of foreclosure, or have lost their home to foreclosure.
Under the federal tax code, all types of forgiven debt are treated as income, subject to regular…
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