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I read this in the paper this morning---One protects struggling homeowners who get their mortgages reduced from paying income taxes on the amount of debt that was forgiven.- 5 things to know about year-end tax breaks
I don't have time research this morning, but think this be good for my seller? I am waiting on the short sale- approval from the bank-- if the bank forgives the debt too yey!!
If you are talking about Debt Forgiveness Act, it wasn't renewed last year, so basically now sellers (in short sales) will have to pay taxes on the amount bank forgive them. Not sure what will be the deal with this act next year
"Lawmakers from both political parties said they were disappointed they were unable to extend the tax breaks beyond this year."
well as the bank is taking so long to approve the short sale- I guess it will not benefit her if the house closes next year --I assume that is how it works?
"Lawmakers from both political parties said they were disappointed they were unable to extend the tax breaks beyond this year."
well as the bank is taking so long to approve the short sale- I guess it will not benefit her if the house closes next year --I assume that is how it works?
The way it was passed, it expires at the end of this year--the transaction would have to close no later than December 31, 2014
I have noticed that many articles about end of year tax planning get recycled every year - without being updated to reflect recent changes in the tax law. So, don't assume that just because it was recently published- that the article is up to date. If it involves taxes I usually go to the IRS web site for the most current information on a particular tax law.
On December 16, 2014, President Obama signed a bill that extended the Mortgage Forgiveness Debt Relief Act retroactively to cover mortgage debt cancelled in 2014. The Mortgage Forgiveness Debt Relief Act (MFDRA) prevents homeowners who went through a short sale from being taxed on the amount of their home mortgage debt that had been forgiven. For homeowners to qualify for a tax break in 2014, their short sale must close by December 31, 2014. The Act has only been extended through 2014. Congress is expected to debate further extension of the Act as part of a larger tax package in 2015. In the meantime, mortgage debt forgiven by a lender in 2015 might count as taxable income. Mortgage Forgiveness Debt Relief Act 2014 - WA Property Solutions
It is true I have not see the IRS press on it, if it is crucial --ask the tax guy or the IRS themselves. Unless the bill does is extended further for 2015 - my seller is out of luck.
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