Good News from Congress? Really? Tax Relief for some

The Mortgage Debt Reduction Act, which provided relief to qualifying taxpayers, expired December 31, 2013, raising concern for consequences on mortgage debt forgiven in 2014 either by agreement with the lender or pursuant to the provisions of the Arizona anti-deficiency statutes.

However, I am pleased to report that our often called “do nothing Congress” has taken action to extend the benefits of that tax forgiveness. On December 16, 2014, the Senate passed H.R. 5771, the Tax Increase Prevention Act of 2014, by a vote of 76-16.  The bill includes a one-year extension of several expired tax provisions that benefit taxpayers, including tax relief for mortgage debt forgiveness.  The relief is effective retroactive to January 1, 2014 but expires on December 31, 2014. The bill also includes one-year retroactive extensions of the 15-year depreciation schedule for leasehold improvements, the deduction of mortgage insurance premiums, and the deduction for energy efficient commercial buildings.  The House passed the bill on December 3.  It now goes to the President, who is expected to sign it into law.

Please note, it was not extended to cover 2015, so unless/until it is extended later in this year, those contemplating short sales or foreclosures with corresponding debt forgiveness need to factor in the tax consequences.

Please also note that the tax relief is not available to all. One needs to determine if the taxpayer is a qualifying taxpayer.

We are experienced in assisting clients with properties that are “underwater” and can provide a game plan if needed. Our Business is Your Peace of Mind^®.

Written by Attorney Irving Hymson, ih@hgplaw.com

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