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Tax Exemption Expires Soon for Some Homeowners

Man - paying billsCrofton area home owners with a loan modification, short sale, or foreclosure pending are currently exempt from federal taxation for any mortgage debt forgiven by their lender.  This exemption expires on January 1, 2013, however.

After the first of the year, debt forgiven by their lender will be taxed as regular income unless the Debt Relief Act is extended – something that most experts won’t dare to predict in the current political and economic climate.

Given the backlog of applications for loan modifications, short sales, and foreclosures, there’s little, if anything, that homeowner’s can do to hurry the process. 

If you’re in this position, the best advice I can give is for you to touch base with your lender or 3rd party negotiator to determine if they’re waiting on any documentation from you. If so, please be sure to submit it as soon as possible.

REALTOR Call to Action:  NAR President Moe Veissi (video)

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