Tax Break for Struggling Homeowners Set to Expire

Tax Break for Struggling Homeowners Set to Expire

NEW YORK (CNNMoney) — The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for forgiven amounts in short sales and principal reductions.

“People trying to do short sales are freaked out about it,” said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. “They’re telling me they’ll do whatever it takes to close by the end of the year.”

Rest here…


4 Responses to “Tax Break for Struggling Homeowners Set to Expire”
  1. Me thinks there is a fox in the hen house.How much more are the American people willing to take? When will we learn that if we don’t take this into our own hands these situations will continue and escalte into worse things to come for all of us.

  2. MDhomeowner says:

    and will they TAX the REMICS for the gains they made on Liquidation proceeds? Especially when they pay thousands over the principle and interest owed?

  3. Louise says:

    Let the IRS collect on the fraudulent REMICS for the mortgage backed securities. That should make everybody happy. That amount will be in the billions leading to trillions. Let the banks pay. They crashed the world’s economy. It is time for them to be tarred and feathered and rode out of town on a rail.

  4. 1ofthemany says:

    Rape and pillage, rape an pillage!!!! on the backs of all Americans owned by the corporation of the US, did you ever sign that contract with them??? Nope no one did they just do what they want to do.

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