Will the Mortgage Forgiveness Debt Relief Act be extended? What does it mean to those who short sale their homes?

I personally don’t know why it wouldn’t be extended for a few more years as there are still plenty of short sales in our Tampa market, but no one seems to be saying much about it. I am a CDPE Short Sale Expert serving the greater Tampa Bay area. If you know anyone in my market that needs help or simply has questions, please tell them to contact me. You can find me on the web at http://www.fishhawkhomesforsale.com

 

Push on to close short sales by Dec. 31

 

WASHINGTON – Dec. 3, 2012 – The race is on to finalize short sales and seal the deal on mortgage reductions as the end-of-the-year expiration of a massive tax break for struggling homeowners in Florida and nationwide looms.

For the past five years, homeowners whose banks have forgiven unpaid mortgage debt after a short-sale principal reduction or foreclosure have not counted that money as income on their tax returns. But the waning days of the federal Mortgage Forgiveness Debt Relief Act means borrowers may be faced with big IRS bills after losing their home if it happens on Jan. 1, 2013, or later.

Florida Attorney General Pam Bondi is leading a group of attorneys general from all over the United States in pushing for an extension of the act. In a recent letter to lawmakers, Bondi and Connecticut Attorney General George Jepsen said that allowing the tax break to expire would dilute the $25 billion mortgage settlement made with the country’s five biggest banks in March. The settlement has already provided $386.7 million in primary mortgage principal forgiveness for homeowners throughout Florida.

“If the act expires, you will be asking people to pay cash on an income they never received and with cash they don’t have,” says John DiBiase, communications director for the National Association of Realtors®’ government affairs office. “I think that is well-understood, especially by members of the Florida delegation.”

Joanne Epstein, a South Florida Realtor, has 18 short sales she believes are on track to close by Dec. 31. Still, she finds that she has to put pressure on the banks to get them finalized.

“(The lenders) say, ‘We have a stack of files. We’re very busy. We’ll get back to you,’” Epstein said. “Well, I’m sorry – that doesn’t work. These people need to get this over with so they can move on with their lives.”

Source: Palm Beach Post (12/03/12) Miller, Kimberly

© Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688

 

Related Topics: Short Sales

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