Courtney: Mortgage Forgiveness Debt Relief Renewal Passes Senate, Provides Relief for Homeowners
December 17, 2014
WASHINGTON—Last night, the Senate approved a House-passed legislative package of “tax extenders” for 2014, sending the bill to President Obama for his signature. Today, Congressman Joe Courtney highlighted the inclusion of a provision that protects struggling homeowners from severe tax penalties after a short sale, mortgage restructuring or foreclosure. Without renewal of the Mortgage Forgiveness Debt Relief Act, distressed homeowners would have incurred income taxes on mortgage debt forgiven in such a transaction—an expensive proposition for families already facing financial distress. The bill will allow sellers to claim the credit on short sales closing on or by December 31st, as well as mortgage restructuring or foreclosures completed by that date.
From January 1 to October 20, 2014 the Connecticut Multiple Listing Service (excluding Fairfield County) reports that 854 short sales closed, and an additional 750 were under deposit. RealtyTrac calculates that there have been more than 170,000 short sales nationwide in the first three quarters of 2014.
“Since the expiration of the tax relief for mortgage debt forgiveness last December, I have been working to avert the devastating impact to Connecticut’s housing market recovery. Families should not be punished a second time when their tax bill comes due after a short sale, mortgage restructuring or foreclosure. Imposing income tax on forgiven mortgage debt is wrong, and it will impede a full recovery of our housing market,” Courtney said. “I am pleased to finally have this bill over the goal line to reinstate this critical tax relief, and I will continue to work to extend it beyond this one-year fix.”
Courtney sent a letter in November to House Speaker John Boehner urging the inclusion of tax relief for mortgage debt forgiveness in the “tax extenders” bill.