Debt Forgivess Tax Relief coming back for 2014 Transfers
Originally Posted 12/8/14
Homeowners who went through foreclosures or short sales during calendar year 2014 may be getting a holiday gift from Congress this year.
Many of you are aware that the Mortgage Debt Forgiveness Act (MDFA) expired federally and in California on December 31, 2013. Because of the expiration, individuals foreclosed on or who short sold are facing significant tax ramifications related to the debt forgiveness income. It looks like that may reverse course.
Last week (12/1) the House of Representatives by an overwhelming margin of 378 to 46 voted to extend the MDFA one year so that the expiration date would now be January 1, 2015, thereby providing debt forgiveness protection to those who were foreclosed on or short sold in 2014. This is not law yet, but it is a good start. With the House passing the bill, it will now move to the Senate for consideration. Hopefully the Senate will take up this matter with haste and provide homeowners the tax relief they need just in time for the holiday season.
While there are many in the Senate of both parties who are disappointed with only a one-year extension of the expired provisions, H.R. 5771 is likely to pass as the last best alternative to no tax extenders bill at all. The President has signaled that he will likely sign a one-year bill. Maybe this step will open the door to a later Bill extending relief into 2015.