Expiring tax exemptions for homeowners facing foreclosure, a relatively uncontroversial response to the foreclosure crisis that had lingered for months on Congress’ to-do list, will be extended in the fiscal cliff deal approved late Tuesday.
Debt canceled through a foreclosure, a short sale or a loan modification on a primary residence was considered taxable income until 2007’s Mortgage Forgiveness Debt Relief Act. Under the fiscal cliff bill passed by Congress and awaiting the president’s signature, that forgiven debt will remain untaxed for another year.
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Without an extension, short sales and loan modifications would have come with an increased tax burden on an already struggling homeowner. That would likely have pushed more to fight foreclosure, dragging out the impact of the foreclosure crisis on the housing market.
Read more at: http://www.oregonlive.com/front-porch/index.ssf/2013/01/fiscal_cliff_bill_extends_tax.html#incart_river
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