The
Mortgage Forgiveness Debt Relief Act (MFDRA) was extended through 2014 by the Tax Increase
Prevention Act of 2014 on December 19, 2014.
Homeowners who were forgiven debt a/k/a “cancellation of debt income” (difference between the total amount of the mortgage still owed at closing and the sale price or fair market value of the property) resulting from a short sale, deed in lieu of foreclosure or foreclosure sale, will have the forgiven debt excluded from their taxable income for transactions completed through 12/31/2014.
Homeowners who were forgiven debt a/k/a “cancellation of debt income” (difference between the total amount of the mortgage still owed at closing and the sale price or fair market value of the property) resulting from a short sale, deed in lieu of foreclosure or foreclosure sale, will have the forgiven debt excluded from their taxable income for transactions completed through 12/31/2014.
The MDFA previously expired on December 31, 2013.
So, for
those who lost a home to foreclosure or a short sale in 2014, you will receive a
nice holiday tax break when you file your taxes in the new year.
