Attorney General Hood Urges Congress to Extend Tax Relief for Struggling Homeowners
Fearing a setback for financially strapped homeowners and disruption to a slowly improving housing market, Attorney General Hood has joined again with 41 attorneys general from around the country in urging Congress to extend soon-to-be expired tax relief for distressed homeowners into next year.
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.
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.
“I urge Congress to again extend this critical tax exclusion so that families that have been able to receive mortgage debt relief do not then face a tax bill that they cannot afford,” Attorney General Hood said. “I believe this tax relief is critical not only for struggling families but also for our continued housing market recovery.”
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 Hood joined 41 other attorneys general in successfully persuading Congress to extend these benefits into 2013.
Click Here for a copy of the letter.