POST UPDATE for January 2, 2013:
On January 1, 2013 the Senate and House passed H.R. 8, legislation to avert the "fiscal cliff," the bill will be signed by the President on January 2, 2013.
Here is the text from H.R.8:
(a) IN GENERAL.—Subparagraph (E) of section 108(a)(1) is amended by striking ‘‘January 1, 2013’’ and inserting ‘‘January 1, 2014’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to indebtedness discharged after December 31, 2012.
Download and read the NAR Issue Brief Regarding Fiscal Cliff Bill
If you are in the real estate business and especially if you work short sales... the big question with no clear answer as of the writing of this article is whether or not the Mortgage Forgiveness Debt Relief Act of 2007 will be extended after the December 31, 2012 expiration.
From IRS.gov site regarding the Act:
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
There are multiple bills currently with congressional committees that, if passed, will extend these protections. Which bill will pass and how long will the extension be?.... Stay Tuned
The push is on to get an extension. Here are the current bills in Congress:
- U.S. House of Representatives:
- Resolution 4336 Summary: To amend the Internal Revenue Code of 1986 to extend the exclusion from gross income of discharges of qualified principal residence indebtedness. This bill would extend tax protections through December 31, 2013
- Resolution 4202 Summary: To amend the Internal Revenue Code of 1986 to extend the exclusion from gross income of discharges of qualified principal residence indebtedness. This bill would extend tax protections through December 31, 2014. Companion bill S 2250.
HR 4250 Summary: To amend the Internal Revenue Code of 1986 to provide a 3-year extension of the exclusion of income from the discharge of indebtedness on qualified principal residences. This bill would extend tax protections through December 31, 2015.
Homeowner Tax Fairness Act (HR 4290) Summary: To amend the Internal Revenue Code of 1986 to extend the income exclusion for discharge of qualified principal residence indebtedness, to provide exclusions from income for certain payments under the National Mortgage Settlement, and for other purposes. This bill would extend tax protections through December 31, 2015.
- Senate: Senate Bill 2250 Summary: Mortgage Foregiveness Tax Relief Act - Amends the Internal Revenue Code to extend through 2014 the exclusion from gross income of income attributable to the discharge of indebtedness on a principal residence.
Forty-one state attorneys general signed a letter urging Congressional leaders to extend the act.
Nevada Real Estate Agents... Earn the Certified Foreclosure Alternatives Consultant designation and 7 hours of Continuing Education!
Next Class is Thursday, January 24, 2013, 9:00am to 4:30 pm
iMortgage - 9121 W Russell Rd, #210; Las Vegas, NV 89148
(215 & Russell Rd.) Take Jerry Trakanian Way to Oquendo into the Desert Canyon Business Park.
Register at http://shop.stevenkitnickseminars.com/
Realty ONE Group agents - call Jan at 702-858-9191 for a 25% discount.