Congress Passes Extension of Mortgage Forgiveness Debt Relief Act

Yesterday, the U.S. Senate passed H.R. 5771, the “Tax Increase Prevention Act of 2014”,  which had been passed by U.S. House of Representatives on December 3, 2014 and is now headed to President Obama’s desk for his approval.  Assuming President Obama signs the act into law, it will be good news for homeowners that sold their homes in a short sale in 2014 or in some other way was forgiven on mortgage debt during this year.  The Tax Increase Prevention Act of 2014 extends the Mortgage Forgiveness Debt Relief Act of 2007 through December 31, 2014 and makes it retroactive to January 1, 2014 so there is no gap in coverage from when the last extension expired.

This falls short of the two year extension the National Association of REALTORS (NAR), among other groups, pushed for which would have covered next year as well, but is at least some relief for those affected this year.  Read the complete article on the extension from last month here.

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Will The Mortgage Forgiveness Debt Relief Act of 2007 Be Extended?

UPDATE December 17, 2014 – Congress has passed an extension of the Mortgage Forgiveness Debt Relief Act of 2007 through December 31, 2014 – It is part of a bill that has been sent to President Obama for his approval.  This falls short of the two year extension the National Association of REALTORS (NAR), among other groups, was pushing for which would have covered next year as well, but is at least some relief for those affected this year.

The Mortgage Forgiveness Debt Relief Act of 2007 provided relief for homeowners that receive forgiveness on some of their mortgage debt (such as is the case on a short-sale) in the form of removing their obligation to pay income tax on the amount of their debt that was forgiven by their lender.  Originally, the Mortgage Forgiveness Debt Relief Act, was to expire at the end of 2012 but was later extended through the end of 2013 and on April 3rd of this year the Senate Finance Committee approved a bill that, if passed, would reinstate a bunch of tax provisions that expired at the end of 2013, including the Mortgage Forgiveness Debt Relief Act of 2007 , through December 31, 2015.  Thus far, the bill has not passed and now many are concerned that it may not which will leave all the people that did short sales this year, or had debt relieved in some other manner, possibly owing income tax on the forgiven debt.

The National Association of REALTORS (NAR) have issued a call to action to it’s 1 million plus members asking them to urge their Member of Congress and Senators to act on “The Mortgage Forgiveness Tax Relief Act” before the end of 2014.  Apparently, the stumbling block to getting this extended has been politics…shocker, right?  The Democratic Majority Leader of the Senate, Harry Reid, according to the NAR website, “refused to allow an open amendment process” which then, in turn, the Republicans “exercised their rights to prevent the bill from moving to a vote.”

Should the Mortgage Forgiveness Debt Relief Act of 2007 be extended?  

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The Mortgage Forgiveness Debt Relief Act of 2007 – Update

Dennis Norman

UPDATE Jan, 2013 – Congress approved extending the Mortgage Forgiveness Debt Relief Act of 2007 through the end of 2013.

I first wrote an article on this topic a little over two years ago as the foreclosure rate was rising and borrowers were concerned about where they stood with the IRS with regard to “mortgage forgiveness”. Well, here we are today with the same issues looming over many people, so I thought I would do an update. Continue reading “The Mortgage Forgiveness Debt Relief Act of 2007 – Update