Senate Approves Short Sale Tax Break

Good News for Homeowners who had a Short Sale in 2014!

From HousingWire.com:

Homeowners who had short sales in 2014 are now one giant step closer to receiving tax relief on any money they received as the result of the sale of their home, after the Senate passed the Mortgage Debt Forgiveness Act by a wide margin on Tuesday.

In a vote late Tuesday, the Senate passed an extension of the Mortgage Debt Forgiveness Act by a vote of 76-16. The extension applies to any short sale conducted in 2014.

The Mortgage Debt Forgiveness Act also passed by a wide margin in the House of Representatives two weeks ago. In the House, the short sale tax break passed by a 378-46 margin.

If Congress had failed to act on the renewal of the tax breaks, any mortgage forgiveness achieved in a short sale would have been counted as income for homeowners whom banks allowed to sell their homes for less than the amount of their mortgage.

RealtyTrac also estimated that the potential taxes on the average short sale to be $22,114, which would have brought the total tax liability to $2.7 billion.

The Mortgage Debt Forgiveness Act now heads to President Obama, who is expected to sign the bill into law.

But the extension only applies to short sales conducted in 2014. Any further extension of the short sale tax break will have to be taken up by the newly elected members of Congress when the Congress begins its 2015 session in January.