Roy Oppenheim’s commentary was originally published on Yahoo Homes! and is being republished on South Florida Law Blog with their permission.
In all the fanfare about last night’s last-minute buzzer-beater agreement to avert the fiscal cliff, you may not have realized that a major component to the housing market’s revival actually survived.
Mortgage loan forgiveness is alive and well my friends.
Why this hasn’t garnered more headlines is beyond me, because this is excellent news for homeowners.
If you are trying to renegotiate your mortgage or are looking to engage in a short sale, you can breathe a bit easier.
Buried within the 150-plus pages of the American Taxpayer Relief Act of 2012, otherwise known as the fiscal cliff agreement, was the news that the Mortgage Debt Relief Act of 2007 was extended for another year.
As early as March, I wondered if loan forgiveness would join us in 2013. As the year progressed there were more and more voices joining my call to have loan forgiveness extended, including most of the country’s attorneys general, but even as the clock winded down on 2012 there was little word from Capitol Hill if they would actually heed the call.
Well lo and behold, Congress actually got the message. Had the Mortgage Debt Relief Act been allowed to expire, the benefits of a short sale would have been eviscerated, along with the chance for housing to thrive in 2013.
Here is the bottom line: The majority of homeowners who sell a primary residence via short sale this year will not have to pay any taxes on any forgiven debt. For example, if your underwater home sells for $100,000 less than what you owe on your mortgage, you can not be taxed on that amount.