Mortgage Forgiveness Debt Relief Act Extended to 2014

Who should care if the Mortgage Forgiveness Debt Relief Act was extended? Anyone who is in process or may be considering a short sale. You see some lenders use a 1099 to get rid of the loss. They 1099 the seller of the home who would then be responsibe to pay taxes on the difference between what they owed on the home and what it actually sold for. The Mortgage Forgiveness Debt Relief Act allows person to avoid paying the tax as it is really income they never received in the first place! It’s complicated, but needed to protect those who short sale their homes. If you know anyone in the Tampa area that is considering short saling their home please tell them to contact me for a free consultation. I have the CDPE designation or Certified Distressed Property Expert and can help them to understand the process. See me on the web at www.fishhawkhomesforsale.com

 

 

 

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Daily Briefing: Wednesday, January 2, 2013
A service for members of Florida   Realtors

Special       Report: Real estate provisions
in ‘fiscal cliff’ bill

WASHINGTON – Jan. 2, 2013 – Yesterday, the House and Senate passed H.R.       8, legislation to avert the so-called “fiscal cliff.” Following       are real estate-related provisions of the bill, which President Obama       plans to sign into law today:

Mortgage Forgiveness Debt Relief Act extended to January 1, 2014. In       place since 2007, the act provided a tax break for homeowners who       struggled through financial hardship such as a foreclosure, and were       granted mortgage debt forgiveness. In the past several months, National       Association of Realtors (NAR) issued numerous calls to action urging its       million-plus Realtor members to ask lawmakers to extend the tax break for       another year. More than a quarter of all transactions involve distressed       properties, the NAR said in its plea. “Homeowners shouldn’t be       forced to pay a tax on money they’ve already lost with cash they never       received.”

Deduction for mortgage insurance premiums for filers making       below $110,000 is extended through 2013 and made retroactive to cover       2012.

The 15-year straight-line cost recovery for qualified leasehold       improvements on commercial properties is extended through 2013 and made       retroactive to cover 2012.

The 10 percent tax credit (up to $500) for homeowners for energy       efficiency improvements to existing homes is extended through 2013       and made retroactive to cover 2012.

“Pease limitations” that reduce the value of itemized       deductions are permanently repealed for most taxpayers but will be       reinstituted for high-income filers. “Pease” limitations will       only apply to individuals earning more than $250,000 and joint filers       earning more than $300,000. The thresholds are indexed for inflation so       will rise over time. Under the formula, filers gradually lose the value       of their total itemized deductions up to a total of a 20% reduction.

First enacted in 1990 and named for Ohio Congressman Don Pease, who       proposed the idea, the limitations continued throughout the Clinton       years. The limitations were gradually phased out starting in 2003 and       eliminated in 2010. Reinstitution of these limits has far less impact on       the mortgage interest deduction than a hard dollar deduction cap,       percentage deduction cap or reduction of the amount of mortgage interest       deduction that can be claimed.

The capital gains rate remains at 15 percent for individuals       earning less than $400,000 per year and couples earning less than       $450,000.  Any gains above these amounts will be taxed at 20       percent. The $250,000/$500,000 exclusion for the sale of principle       residence remains.

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