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Congressman Tom Reed announced today that he has introduced HR 4336,the Mortgage Cancellation Tax Relief Act of 2012, in the House of Representatives. The bill, which has 10 co-sponsors, will extend expiring tax relief for forgiven mortgage debt.
“Nearly a quarter of all homeowners owe more on their mortgages than their home’s current fair market value,” Reed observed. “Loan modifications, short sales and foreclosures are frequently the result of job loss. Relieving this large unanticipated tax burden will help those experiencing what is often the single largest financial loss of their lifetime.”
“Mortgage debt forgiveness is not disposable cash for the mortgage holder,” Reed continued. “Piling additional tax burdens on people at such a difficult time makes their precarious situation worse. The money which would have otherwise gone to Washington is needed for their essential expenses. I believe that they can make better decisions with that money than Washington can.”
At the onset of the housing crisis, Congress enacted legislation that temporarily relieved homeowners of the requirement to pay income tax on forgiven mortgage debt. However, the relief provision is scheduled to expire at the end of 2012. Reed’s bill will extend the relief through the end of 2013.
“The housing market remains very fluid,” Reed said. “Both homeowners and lenders deserve certainty about the tax consequences of these complex transactions. Extending this relief for at least another year will allow time to reassess the stability of the housing market and continue providing some relief to struggling homeowners.”