Permanent Mortgage Debt Tax Forgiveness… To Be or Not to Be?

I’d love to hear where the general public stands on this. I’m in the middle of a debate with myself about folks this would help and who it might harm.

Short Sales and Foreclosures are not nearly as prevalent as they used to be but they do still exist.

Mortgage debt tax forgiveness during the financial crisis essentially eliminated the homeowner’s tax obligation for the balance of a mortgage that was ‘taken back’ through foreclosure, short sale or other financial event. Situations like these were overwhelmingly common at the time and it was determined that the financial hardship so many folks were experiencing should not be made worse. Not only would it cripple the homeowner’s financial recovery but it would delay home sales, devastate communities and impede the recovery of the country’s Real Estate market.

This relief effort has expired and there is significant controversy over whether or not we should reinstate it.

I’d be curious to know what you think, and why… and I suppose it’s a good idea to let congress know as well as this seems to be a hot button issue right now.

REALTORS® Fight for Permanent Mortgage Debt Forgiveness

If you or someone you know fell on tough times and experienced a foreclosure, short sale or loan modification, mortgage forgiveness tax relief helped ease the burden. However, these tax provisions recently expired, which could mean the debt that lenders forgive in these scenarios could now be considered taxable income.

According to recent testimony from the National Association of REALTORS® (NAR) before the U.S. House Ways and Means Subcommittee on Tax Policy at a hearing evaluating recently expired tax provisions, the exclusion for forgiven home mortgage debt following a foreclosure, short sale or loan modification due to financial hardship should be made permanent to provide relief to troubled borrowers and minimize the damage to families, neighborhoods and communities.

NAR has long advocated for mortgage forgiveness tax relief, policy that was first established in 2007 at the onset of the housing and economic downturn, which has expired and been extended several times. In early 2018, it was retroactively extended to cover 2017. Without the exclusion, the debt that lenders forgive is considered taxable income and adds a tax burden at a time when an individual or family has experienced a true economic loss. NAR believes most of these people are already in financial distress and likely unable to pay additional taxes.

The good news is, home equity is on the rise and short sales and foreclosures are down. However, there are still about 2.5 million homes that are underwater, according to industry data. While this is far less than the height of the recession when nearly a quarter of mortgaged homes in the U.S. had negative equity, NAR believes the tax exclusion is still a critical part of helping those homeowners in financial distress get back on their feet.

Talk to your real estate agent to find out the current state of your home equity, and for more information about NAR’s mortgage debt cancellation tax relief efforts, visit www.nar.realtor/topics/mortgage-debt-cancellation-relief.

If you need more real estate information, feel free to contact me.

For more information, Call or Text: 602-999-0952
eMail: golfarizona@cox.net
Bill Salvatore / Arizona Elite Properties
Residential Sales, Marketing, and Property Management

Founder: AZVHV ⋅ MEMBER: Heroes Home Advantage
Voted East Valley Tribune’s: Best Gilbert Realtor

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Call us for details: 602-999-0952

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