Will The Tax Relief act be Extended? If not what's the New Plan for homeowners

It's been very quiet, in regards the expiring Mortgage Debt Relief Act....

I saw this post and failed to get the name of the person who posted it. I do apologize...I felt it was important to share

Shouldn't we being doing something to get this extended?

Here are the bills that would cause this act to be extended:

H.R. 2788: Mortgage Forgiveness Tax Relief Act Introduced: Jul 23, 2013 Sponsor: Rep. Joseph Heck [R-NV3] Status: Referred to Committee Mortgage Forgiveness Tax Relief Act – Amends the Internal Revenue Code to extend through 2015 the exclusion from gross income of income attributable to the discharge of indebtedness on a principal residence. H.R. 2994: Mortgage Forgiveness Tax Relief Act of 2013 Introduced: Aug 02, 2013 Sponsor: Rep. Tom Reed II [R-NY23] Status: Referred to Committee Status: This bill was assigned to a congressional committee on August 2, 2013, which will consider it before possibly sending it on to the House or Senate as a whole Mortgage Forgiveness Tax Relief Act of 2013 – Amends the Internal Revenue Code to extend through 2014 the exclusion from gross income of income attributable to the discharge of indebtedness on a principal residence.

In the meantime… between NOW and the End of the Year…

You should consider the possibility that the Mortgage Forgiveness Debt Relief Act will not be extended past the end of 2013 and as a result, we would recommend you recommend to your short sale owners in default to move quickly on selling their home now, and push to close by December 31, 2013.

I'm hearing that attorney's will advise their sellers to let their house go to foreclosure in-order to avoid paying taxes. If the bank should come after them they can file for bankruptcy and get deficiency wiped out. Is this the plan? I say lets fight and get this Bill extended....What do you say?

Replies

Wayne Brooks November 30, 2013 at 7:23pm

Well, if the property goes to foreclosure, then the bank forgives the debt, it's the same as a short sale, and any applicable income tax would be due....assuming no MDRA in place. The more likely advice from attorneys will be to do BK prior to foreclosure, thus eliminating any tax liability and any potential deficiency.

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