Mortgage Debt Relief Act of 2007 Extended by Congress
Good News for Short Sale Sellers
The Mortgage Debt Relief Act of 2007 offers tax relief to certain home owners who short sale their homes or had a foreclosure. When a foreclosure or short sale occurs, the debt cancellation may be considered ordinary income. This Act allows some homeowners an exemption and may remove tax liability preventing these distressed home owners from further tough consequences resulting from their short sale or foreclosure.
The Mortgage Debt Relief Act was set to expire on December 31, 2012 though it was extended by Congress as part of the deal reached to avoid the fiscal cliff.
This is good news for home sellers who were trying to beat the clock and were not able to close by December 31, 2012 and were concerned about the tax consequences they might incur for failure to close on time.
If you have questions about an Orange County short sale and would like to schedule a free consultation, please contact Christine Donovan at 714-319-9751.
This post is not intended as legal nor tax advice and no warrantee or guarantee is intended. Please contact your legal and tax advisors to discuss your specific situation.