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Congress Approves Short Sale Tax Break for Struggling Homeowners

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Homeowners who had their mortgage debt forgiven in a short sale during 2014 will likely not be required to pay tax on that forgiven debt. According to Inman News, Congress passed the Tax Increase Prevention Act this week, which seeks to extend a number of expired tax breaks for taxpayers. Among those expired tax breaks is the Mortgage Forgiveness Debt Relief Act of 2007. Without the act, which lapsed at the end of 2013, a homeowner who owed $300,000 on their home mortgage but was allowed to sell the home for $200,000 would be expected to pay taxes on the $100,000 difference their mortgage lender forgave. President Obama is expected to approve the retroactive bill before the end of the year shielding struggling homeowners from a hefty tax bill.

Read the entire article to learn more.

Image credit: Secret Pilgrim

 

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