Call-for-Action: Urge Congress to Extend Mortgage Forgiveness Tax Relief
The National Association of REALTORS® has issued a call-for-action regarding the extension of current tax law provisions that allow homeowners experiencing a short sale, foreclosure, or loan modification to avoid having to pay income tax on the portion of the mortgage forgiven by a lender.
NAR is calling for immediate extension of the Mortgage Forgiveness Debt Relief Act, which is due to expire on December 31, 2012 by urging passage of H.R. 4336 and S. 2250, companion bills introduced into the U.S. House and Senate on NAR’s behalf. If Congress does not act, owners of distressed properties in essence could face a tax penalty if they try to modify their mortgage or seek a short sale as the amount of debt forgiven by a lender would be considered “phantom income” to the borrower even though they never received any payment from the lender.
To take action, NAR is encouraging members to first review the Issue Brief about Mortgage Cancellation Tax Relief, and then tell Congress to extend the Mortgage Forgiveness Tax Relief.