The United States Senate recently approved a bill that provides tax relief on forgiven mortgage debt. The legislation now moves to the President, who is expected to sign it into law.
The bill provides for a retroactive one-year extension on the tax provision which was scheduled to expire on December 30, 2014, and would be effective for those filing 2014 returns next year. The provision protects distressed homeowners from paying taxes on any mortgage debt forgiven in a short sale. It was previously created and called the Mortgage Forgiveness Debt Relief Act of 2007 with the intention of protecting homeowners who lost their home in a short sale or deed-in-lieu of foreclosure from paying an outrageous taxes. Before the exemption, distressed homeowners had to pay taxes on the mortgage debt that was canceled or forgiven by the lender. It was treated as ordinary income and taxed as such.
This is great news for homeowners that are undergoing or contemplating a short sale. Bradford Miller Law has been representing both buyers and sellers of short sale properties for several years. We offer free legal representation to homeowners seeking a short sale. Call our office, at 312-238-9298, for a FREE 15-minute consultation.
Posted by Bradford Miller Law, P.C.
Practicing in Real Estate Law, Landlord Tenant Law and Estate Planning
134 N. LaSalle Street, Suite 1040
Chicago, IL 60602
http://www.bradfordmillerlaw.com
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