|December 19, 2013
Media Contact: Jenn Meale
Phone: (850) 245-0150
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TALLAHASSEE, Fla.—In an effort to assist Florida’s distressed homeowners and to maintain the improvement in the housing market, Attorney General Pam Bondi and Attorney General Jepsen of Connecticut, sponsored a letter, along with 41 other attorneys general from around the country, to urge Congress to extend soon-to-be expired tax relief for distressed homeowners into next year.
“In Florida, we are doing everything we can to assist distressed homeowners. Those who have benefited from certain relief, such as principal reduction and forgiveness, under the National Mortgage Settlement may face significant setbacks, including default and even foreclosure, if the current tax exemption on this relief is not extended,” stated Attorney General Pam Bondi.
Under the federal Mortgage Debt Relief Act, in effect since 2007, mortgage debt that is forgiven after a foreclosure or short sale or through a loan modification provided to a homeowner in financial hardship may be excluded from a taxpayer’s calculation of taxable income. This exclusion only applies to mortgage debt forgiven on primary residences, not second homes.
The expiration comes at a time when the housing market, while still fragile, has shown signs of gradual improvement over the last year. Data shows that home prices have increased this year, and the S&P/Case-Shiller home price index reported gains of 12 percent or more. CoreLogic has also estimated that 2.5 million more families have had their homes returned to positive equity in the second quarter of 2013.
An extension for 2014 is included in the Mortgage Forgiveness Tax Relief Act (S. 1187 and H.R. 2788), both of which are in committee; it is uncertain when these critical bills may be considered. The current Ryan-Murray budget proposal does not include the exemption provision.
Last year, Attorney General Pam Bondi joined 41 other attorneys general in successfully persuading Congress to extend these benefits into 2013.
Click here to view the letter: http://myfloridalegal.com/webfiles.nsf/WF/JMEE-9EJLDA/$file/MortgageForgivenessTaxReliefSignOn.pdf