Mortgage Forgiveness Debt Relief Act to be Extended?

We’ve been watching this one for the past year.  The Mortgage Forgiveness Debt Relief Act has helped protect countless homeowners from tax liability following a foreclosure or short sale.  Without this Act, any forgiven debt through a short sale or foreclosure would be considered income, which would be taxable.  The following article highlights efforts by the Senate Finance Committee to extend this protection

http://www.washingtonpost.com/realestate/underwater-homeowners-would-benefit-from-debt-relief-baill-passed-by-senate-panel/2012/08/09/323fe292-e091-11e1-a19c-fcfa365396c8_story.html 

If you watch enough late-night tv, you’ve probably seen your share of short sale “experts” urging you to contact them immediately before this Act expires.  Assuming the Act is extended, we can call off this fire drill for a while longer.  The extension would give folks another year of protection from tax liability from a short sale.  We’re happy to see the Finance Committee take action before their Summer break.  We’ll keep an eye on this one a bit longer and report back once we confirm that it has been extended.