As Congress returns to Washington, there is unfinished business to complete. One of those items is a housing issue that could affect almost a quarter of all real estate transactions – the expiration of Mortgage Forgiveness Tax Relief.
Without action before the end of the year, millions of families who hold distressed properties could face a hefty tax bill for trying to modify their mortgage or to seek a short sale through their lender. Even those facing foreclosure will find themselves forced to pay a “foreclosure tax” if Congress doesn’t act. This is because the amount of debt forgiven by the lender would be considered “phantom income” to the borrower even though they never receive any payment from the lender. No taxpayer should be forced to pay tax on money they’ve already lost with cash they never received. We need no additional obstacles that could throw the housing recovery off track.