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BLOG: Congress Renews Money-Saving 'Mortgage Forgiveness Debt Relief Act' for One More Year

Congress Voted---AND HOORAY!!! You are still exempt in 2013 from taxation on mortgage debt that is forgiven on a short sale, principle reduction, loan modification or foreclosure.

Congress started the New Year with some good realty financial news for you.
The below announcement came to me this AM from Don Faught, President, California Association of Realtors, and reads as follows---

Late last night, Congress reached a settlement in the “fiscal cliff” negotiations.  As a result, the Mortgage Forgiveness Debt Relief Act has been extended for another year.

The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction) or foreclosure. 

REALTORS® should tell their clients to keep their short sales on the market and encourage them to consult with their own tax advisers about their tax situation.

I want to thank the 26,296 California REALTORS® who sent messages to their members of Congress and made 1,862 calls in response to our Call-for-Action.

The settlement also will allow capital gains rates to rise from 15 percent to 20 percent for high-income earners.  

However, capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.

I will continue to keep you updated with more detailed analysis as it becomes available.

Happy New Year to you all!

Don Faught

This measure can save you whopper amounts of money on a short sale, loan modification (including any principal reduction) or foreclosure. 

Unfortunately, it is unknown whether this benefit will be renewed in 2014 since it seems we can no longer count on our congressional leaders to attend to business in a timely fashion.

Rep. Charles Rangle of New York said near the end of 2012, "Today 12 million Americans are on the verge of losing their homes because they owe more money than their home is worth. Republican or Democrat, none of us in Congress wants to see our constituents who have just lost their homes be forced to pay unforeseen taxes when money is already tight. We should put our political differences aside to do what is right for the American people.”

And Congress did do just that.

I guess we will just have to count our current blessings and hope that mortgage interest rates stay as low throughout 2013 as they have recently been.

Check back here often to see any other measures that Congress approves that can impact your realty holdings, purchases or sales. Or, visit my San Clemente real estate web site to contact me directly with related questions you may have.

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