One of the more common questions about short sales over the last year has been what Congress is doing about renewing the Mortgage Debt Forgiveness Act and its included Tax Increase Prevention Act of 2014.
Without its renewal, any mortgage forgiveness resulting from a short sale would be counted as income for those sellers who were allowed by their lender to sell their homes for less than their mortgage balance. Being that the average short sale has a debt forgiveness of almost $75,000, that is no small consideration.
Well, last week the House of Representatives passed a 1-year extension, and now it is up to the Senate to act before the new Congressional session begins in January 2015.
Even though short sales have decreased significantly over the last two years, there are still a lot of people who qualify for a short sale. According to an estimate from RealtyTrac, in the first three quarters of 2014, there have been over 170,000 short sales representing $8.1 billion in debt forgiveness.
As always, anyone considering a short sale should consult their tax professional to review how it would specifically impact their taxes.
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My Agent Greg 