Short Sale Tax Relief for 2014?

On December 31, 2013 The Mortgage Debt Relief Act of 2007 expired!  Without an extension, homeowners who have any amount of a mortgage forgiven by a lender either in a short sale or foreclosure would be subject to paying “phantom income tax” on the amount of the forgiveness.  Homeowners shouldn’t be forced to pay tax on money they’ve already lost with cash they never received – and never will receive. That’s crazy…don’t you think?

Current U.S. Senate Legislation: S. 1187 the “Mortgage Forgiveness Tax Relief Act” introduced on June 19, 2013 by Senators Stabenow (D-MI), Menendez (D-NJ) Isakson (R-GA) and Heller (R-NV).

Current U.S. House Legislation: H.R.2994 “Mortgage Forgiveness Tax Relief Act of 2013” introduced on August 2, 2013 by Congressmen Reed (R-NY) and Rangel (D-NY)

NAR has aggressively sought co-sponsors for both the House and Senate bills, currently 19 Senators have cosponsored S.1187 and 48 Members of Congress have cosponsored H.R.2994

Where it stands today, House: The United States House of Representatives adjourned the first session of the 113^th Congress without taking action on H.R. 2994.

Where it stands - Senate:  On December 19, 2013, Senator Debbie Stabenow (D-MI) conducted a discussion, known as a colloquy, with a number of colleagues on the Senate Floor to underscore the importance of passing this legislation.  After the colloquy concluded, Senate Majority Leader Harry Reid (D-NV) came to the floor to request Unanimous Consent to bring up and pass a number of expiring tax provisions, including Mortgage Cancellation.  Under Senate rules only one Senator has to object to stop the process, and Senator Reid’s request was objected to.  Senator Reid then announced his intention to work with Republicans to pass a tax extenders bill – including mortgage cancellation, early in 2014 that would be retroactive.  A few days ago, Senate Finance Committee Chairman Max Baucus (D-MT) also expressed his intention to move the bill, along with a limited number of other tax provisions early in 2014.

So…if you’ve waited to move forward with a short sale on your home, keep reading here for the latest update or feel free to call me any time at 561.602.1258

Happy/Healthy New Year…and thanks for reading.

Steve Jackson