Mortgage Forgiveness Debt Relief Act Extended
In breaking news today, for those of you who have not yet closed your short sale and have been fretting about paying taxes on canceled debt, the fear is over. As part of the Fiscal Cliff deal, both the House and the Senate passed an extension his morning to the 2007 Mortgage Forgiveness Debt Relief Act. The mortgage debt relief act has been extended to January 1, 2014.
This applies to up to $2 million of canceled debt as a result of a foreclosure or a short sale or other modifications for a principal residence to the extent the money was used to buy or improve the property. In California, purchase-money loans are exempt anyway, so this affects primarily sellers with hard money loans. Still. It’s good that the mortgage forgiveness debt relief extension passed for 2013.