Homeowners benefit from extended mortgage debt tax relief

A final decision regarding the fiscal cliff will likely provide relief to Americans concerned with their own finances, while the solution ultimately extended a soon-to-expire tax break for forgiven mortgage debt.

A final decision regarding the fiscal cliff will likely provide relief to Americans concerned with their own finances, while the solution ultimately extended a soon-to-expire tax break for forgiven mortgage debt.

The tax break that initiated in 2007 was set to expire on December 31, 2012, though it has been extended to the end of 2013 with the dodging of the fiscal cliff. This break allowed homeowners who received debt forgiveness from a mortgage modification program or short sale to exempt this balance from their taxable income, making it easier for homeowners to overcome their financial troubles.

Before a decision was made, many homeowners pushed to complete short sales before the tax break expired, which could have negative implications on reports for the final month of the year, while the inventory of underwater homes on the market could be lower to start the year.

Having a low inventory of foreclosed houses and otherwise delinquent properties on the market often allows other housing factors such as home prices to improve.



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