The Mortgage Forgiveness Debt Relief Act of 2007, and its extending 2012 amendment, currently allow exclusion of income realized as a result of debt reduction on a taxpayer’s principal residence. This act aids and promotes short sales and loan modifications for Michigan homeowners who might be underwater on their residential properties. The act first expired at midnight on December 31, 2012. Then the fiscal cliff bill enacted by the Congress in late December 2012 extended the relief through the end of 2013. Now, another bill was just introduced in June 2013 that would extend the relief through the end of 2015.
Under the Federal Tax Code, forgiven mortgage debt is treated as income and therefore subject to income tax. As the expiration date draws near, homeowners are rushing to complete short sales before the end of the year to avoid tax on the difference between their mortgage debt and the sale price. For many, this tax would have been thousands of dollars.
This extension is especially important to homeowners who may be underwater, individuals who may owe more than their homes are worth. Short sales enable homeowners with no equity in their homes without facing significant difficulties paying income tax on their forgiven debt.
Ryan Overmyer is a Realtor with Keller Williams Realty in Michigan. He’s provides consultation and representation for short sale real estate transactions. Ryan Overmyer is the #1 Short Sale Expert in The State of Michigan. He specializes in helping homeowners who owe more than their homes are currently worth.
In 2012 The Office of Ryan Overmyer, in partnership with a local law firm, successfully secured the release of over $37,000,000 in deficiency judgments for their clients.
If you owe more than your home is currently worth, a short sale might be a good option for you. For more information on how The Office of Ryan Overmyer can help you, call: 734-926-0999
We will continue to post updates as more information specific to the extension becomes available.