Homeowners facing short sales, reduced loan principals or foreclosures can breathe easier after the 2007 tax break was extended late Tuesday in a bipartisan vote. If the tax break had not been extended, any reduction in debt as a result of banks forgiving loans would have been fully taxable as income.
Florida short sales in recent months have sold on average for about $103,000 less than what the homeowner owed, according to data firm RealtyTrac. Without an extension, a home seller in a 25 percent tax bracket would have owed $25,725 more to the IRS.
The extension will allow homeowners this year to avoid paying taxes on any debt reduced or eliminated by their lender. The extension for the break will continue until the end of 2013, and should help the economy by boosting the real estate market and reducing the inventory of foreclosed homes more quickly.
For more information or for a free consultation, contact Scott and Fenderson, PA Injury and Family Law Attorneys, by calling 727-321-0099 or view our web site www.scottandfenderson.com