There’s good news for first-time homeowners who are underwater on their mortgage: The 2013 American Tax Payer Relief Act, in section 202, will allow for the Mortgage Debt Relief Act to be extended for another year, until January 1, 2014.The extension of this law, which has been in effect since 2007, will allow homeowners who are facing financial hardship to sell their home, even at a loss, and not owe taxes on the amount which was forgiven. It allows them to get out of their home in a dignified way, by working through the short sale process instead of just giving up, walking away from the home and letting it be foreclosed on instead of facing a large tax bill.
For homeowners who are deeply underwater in their homes, and were thinking of going through foreclosure because the thought of paying taxes on the amount of money, this law will give them a better option. Working through a short sale has a much better impact on their credit score and credit report. Additionally, it will allow them the ability to buy a home again much sooner.
If your situation could benefit from the mortgage debt forgiveness act, call us today to get more information.