Mortgage Debt Relief Act Extended for 2013

There is some good news to start off this New Year for many of our clients, realtor friends and thousands of homeowners nationwide. Last night, the US Senate and House of Representatives (finally) passed the 2013 American Tax Payer Relief Act. Under section 202 of the same, the Mortgage Debt Relief Act will now be extended until January 1, 2014, or more clearly stated, through the 2013 calender year.

This basically means that the corresponding tax implications of a cancelled mortgage debt following the completion of a short sale or loan modification by homeowners will be automatically forgiven (assuming the cancelled debt is related to their primary residence). This tax forgiveness is a huge benefit to any homeowner facing foreclosure or otherwise underwater with their mortgage(s).  As Florida Attorney General, Pam Bondi, stated earlier today, ”[t]his extension will help struggling homeowners take full advantage of the assistance offered them by the national mortgage settlement and other foreclosure relief programs.”

It is important to note that the short sale process can be complex and time consuming due to issues which may arise throughout the process, such as association matters, multiple mortgage settlements and/or liens. Also, and as you can see from the taxt above, related laws and government programs are constantly changing as they try and adjust to this market. Therefore, having an experienced attorney and staff negotiating on your behalf helps assure that you will be able to take advantage of these programs and sell your “underwater” property with the peace of mind that you will be free and clear of the property and any corresponding debts at closing.

Leave a Reply