Still no short sale tax forgiveness this year
October 15, 2014
WASHINGTON – Oct. 15, 2014 – In a short sale, an owner sells his home for less than the amount stated on his mortgage, with the balance forgiven by the lender.
Last year, homeowners could move on after the sale. Any money forgiven by the bank could be forgotten.
This year, however, Congress has failed to extend the Mortgage Debt Forgiveness Relief Act. If passed as it was in previous years, lawmakers would have made the law retroactive to Jan. 1, assuring all 2014 short sellers that they would not be taxed on mortgage money they never actually received.
This year, however, the story is different – so far. In January 2014, the National Association of Realtors® (NAR) and other practitioners expected a retroactive passage of the mortgage debt act because it generally had bipartisan support in Congress. In May, NAR and others felt the same way, but with a bit less assurance.
The law has still not passed Congress, however, and fewer observers are now sure that it will.
However, the November election may be a deciding factor. While little Congressional action is expected before Americans go to the polls, there is still a small window of time afterward when Congress could act.
For more information on the Mortgage Debt Relief Act, visit NAR’s “Mortgage Debt Cancellation Relief” page.