Congress Considers Yet Another Extension of Mortgage Forgiveness Debt Relief Through 2015
(Posted Oct 31, 2013)
For updated information on this topic, see our more recent law alert.
The Mortgage Forgiveness Debt Relief Act of 2007 (Pub L 110-142, 121 Stat 1803) and its extending 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 on underwater residential properties. See IRS, Ten Facts for Mortgage Debt Forgiveness (Mar. 3, 2011).
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. See Senate Bill 1187, introduced by a Michigan senator and co-sponsored by California Senator Barbara Boxer. The bill’s progress through Congress can be tracked here.
For more information on the Act and its effect on homeowners, see CEB’s January 2013 Law Alert.
For further discussion of foreclosures, short sales, and loan modifications, see California Mortgages, Deeds of Trust, and Foreclosure Litigation, chaps 2, 7, and 10 (4th ed Cal CEB).
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