What's the word on mortgage debt relief in 2014?  Was it extended?  If not, is it expected to be addressed again soon?  If it no longer exists, what tangible benefit(s) exist for the homeowner aside from avoiding foreclosure?

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it currently has not been extended but it is still being reviewed and hopefully considered retroactive if approved.  I read something a month or so ago that was talking about how homeowners don't need to have the mortgage tax relief act in order to avoid paying income tax on the deficiency.  What it basically was saying is that when a person does a short sale, they are for the most part insolvent.  this is an exclusion in the tax guide (pub 908)............here is something I got off the internet about it:

Other Exclusions for Canceled Debts

Besides the provision for mortgages on main homes, the tax code provides other ways that canceled debt can be tax-free. Canceled debts do not need to be included in taxable income if the debt was canceled in a bankruptcy case, if the individual is insolvent, or if the canceled debt was intended as a gift. Certain business or farm property may also qualify for tax-free treatment.

The insolvency exclusion is particularly relevant, as it will likely apply to borrowers with home equity loans or mortgages on second homes and rental properties.

This insolvency provision will prove helpful to individuals who don't otherwise qualify for the mortgage debt relief. To be considered insolvent, the person's liabilities must exceed the fair market value of their assets. This is will be especially true of borrowers who's properties have dropped in value and who now must restructure their loans or surrender their properties through foreclosure.

"A debtor is insolvent when, and to the extent, the debtor's liabilities exceed the FMV of the assets. Determine the debtor's liabilities and the FMV of the assets immediately before the cancellation of the debtor's debt to determine whether or not the debtor is insolvent and the amount by which the debtor is insolvent." (Source: Publication 908.)

I would imagine this doesn't apply to the second home, investment home or even a foreclosure since the person who let the home go to foreclosure didn't prove insolvency.  I would like to hear some feedback on this if possible. 

It's Form 982, not 908 which deals with bankruptcy. Essentially,and excluding the shorted property itself, if the borrower has zero total net worth, no taxes are owed, $30k net worth, taxes on $30k of income/forgiven debt owed, etc. this is General, and one Must see a CPA for their particular circumstance.
The MDRA, as well as the insolvency test, applies to foreclosures and DIL's, as well as primary residence short sales. The insolvency test also applies to second homes and investment properties.

I'm not talking about BK but rather talking about short sales.  There is a section in Pub 908 that discusses the exclusions of cancelled debts just as I posted in my original post.  Please ignore the BK section.  We all know that form 982 is the form to use for short sales. I agree one must seek an accountants advice regarding anything pertaining to taxes.  However, what we are trying to seek here is a possible solution that our clients can know in order to talk to their accountants about so they have some relief to the act not being extended.  (at least as of yet)

I too am curious for an update on extension of the act and can't find any information on it, anywhere.  And here we are 3 weeks down the road from when you posted this...   

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