Great news for Columbia Homeowners who intend to sell their primary residence via a short sale this year.
The tax break that has saved struggling homeowners from paying thousands of dollars to the IRS has been extended.
The Mortgage Forgiveness Debt Relief Act of 2007 was extended for one year, through December 31, 2013, as part of the fiscal cliff compromise approved by the House and Senate.
Section 202 contains the language about the extension. Attached is the bill, or you can access it by clicking here: http://www.scribd.com/doc/118551686/Mat-12564 .
This means if a Columbia Homeowner owes $150,000 on their home and it sells for $100,000 in a Short Sale, the remaining $50,000 may now still be covered under this Act. For a Columbia homeowner in the 25% tax bracket, that could mean a savings of $12,500 in taxes on the short sale. Similar taxes would apply for amounts that were forgiven in other short sales and principal reductions.