Mortgage Forgiveness Debt Relief Act Extended to 2013
Debt Foregiveness Act Extended
It came as very welcomed news that the Mortgage Forgiveness Debt Relief Act was extended through 2013.
This extension means that instead of expiring on December 31, 2012, homeowners will now “be excused from paying taxes on forgiven mortgage debt through 2013.” Had the Act not been extended, homeowners who had previously sold their homes through short sale or had received mortgage modifications would have had to pay tax bills on that forgiven amount. Many in the industry believed that this would stunt the housing recovery that we seem to be entering now. Florida’s Attorney General, Pam Bondi, said yesterday, “This extension will help struggling homeowners take full advantage of the assistance offered them by the national mortgage settlement and other foreclosure relief programs.”
As part of the “fiscal cliff” vote, the Mortgage Forgiveness Debt Relief Act is being extended. What this simply means is that when a struggling homeowner sells their home for $75,000 and they owe $150,000, they are not taxed on the $75,000 that the bank had to write off. This is good news for homeowners that are struggling.
Other homeowner benefit extensions include being able to deduct your private mortgage insurance for those who make less than $110,000 a year. This is retroactive back to 2012 and includes 2013.
A tax credit of up to $500 is available to homeowners who made energy improvements to their home in 2012. This is also available in 2013