Knoxville Short Sale – Mortgage Debt Relief Act To Be Extended Through 2014

taxesFor those Knoxville homeowners who have completed a short sale this year, the extension of the Mortgage Forgiveness Debt Relief Act and Debt Cancellation is extremely important. The Mortgage Forgiveness Act expired on December 31, 2013, meaning that without the extension through 2014, any homeowner who completed a short sale would be responsible for paying taxes of the forgiven debt. Luckily, both the House of Representatives and the Senate extended the act through 2014, and President Obama is expected to sign off on the extension soon. So what does the extension of the Mortgage Forgiveness Act mean for Knoxville homeowners who have been through a short sale? Under the Mortgage Forgiveness Act, any borrower who sold their Knoxville home in a short sale, modified their loan, or went into foreclosure, is not required to pay taxes on that income on their 2014 taxes. Homeowners are allowed to have up to $2 million forgiven for those filing their taxes jointly and $1 million for those filing his/her taxes as individually. Unfortunately, the act only applies to homes that are considered to be a primary residence. If the home is not a person's primary residence, a borrower may still qualify to exclude the tax as claimed income. In order to due so, a borrower would have to show they are insolvent, which is when your total liabilities exceed your total assets. For more information about what the Mortgage Forgiveness Debt Relief Act covers, visit the IRS website. Unfortunately, the Act is only extended through 2014, so any homeowner who completes a short sale in 2015 may be required to pay taxes on the forgiven income, unless the act is extended yet again. Are your relieved that the Mortgage Debt Forgiveness Act has been extended? Are you behind on your mortgage payments. If so, do not hesitate to contact me at 865-696-9002 or email me [email protected]

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