With the end of the year quickly approaching, many homeowners who are underwater with their mortgage or received a lender approved principal reduction in 2014 are feeling the stress as to whether the Congress will renew the Mortgage Forgiveness Debt Relief Act of 2007, which expired on December 31, 2013. Without passage by both Houses of Congress many Americans will face tax liability, as income, for the debt forgiven by their lender.
It appeared the Senate was going to pass the extension over the summer, however during the committee process, an amendment was added to the bill, repealing the excise tax on medical devices. With the amendment attached to the bill, it was not brought before the full Senate for a vote. Speculation is that the House of Representatives will not consider the extension of the Mortgage Forgiveness Act without the amendment.
It is a coin toss as to whether or not the Act will be extended, and if it is, whether or not is applied retroactively to include debt forgiveness for all of 2014. We will advise you of any developments.