Without an extension of this law over ten million current US homeowners, who owe more on their home than it is worth could get hit with a huge IRS tax bill, should they do any type of loan modification, a deed in lieu of foreclosure, or a short sale
(PRWEB) December 20, 2012
The Homeowners Consumer Center is urging President Obama, and the US Congress to immediately extend the Mortgage Forgiveness Debt Relief Act now, before time to do so comes, and goes. Without an extension of this law over ten million current US homeowners, who owe more on their home than it is worth could get hit with a huge IRS tax bill, should they do any type of loan modification, a deed in lieu of foreclosure, a short sale, or anything else that involves a mortgage principal reduction from their mortgage lender in 2013. The Homeowners Consumer Center says, "We fear most US homeowners are not aware of the fact that without an extension of the Mortgage Forgiveness Debt Relief Act by President Obama, and the US Congress, any sort of principal reduction by a bank involving a loan modification, a short sale, a deed in lieu of foreclosure, or foreclosure will be treated as ordinary income by the US IRS. Just as an example if you live in Las Vegas, Los Angeles, Oakland, Miami, Chicago, Cincinnati, Phoenix, Saint Louis, Atlanta, Minneapolis, Memphis, Boston, or any other US city, and town, and your lender, or mortgage loan servicing company agrees to a mortgage principal reduction as part of a loan modification, or a short sale-the mortgage principal reduction will be treated by the IRS as ordinary income by the US IRS. Is this really what President Obama meant when he said Forward during his 2012 presidential campaign?" http://HomeownersConsumerCenter.Com
According to Bloomberg News on November 29th 2012, "The Mortgage Debt Relief Act of 2007 enables borrowers to avoid paying income taxes on the amount of principal that’s forgiven as part of a loan modification or during a short sale in which they sell their homes for less than they owe. If the measure expires, homeowners would have to count such debt reduction as money they earned." http://HomeownersConsumerCenter.Com
The Homeowners Consumer Center believes casualties from President Obama, and the US Congress failing to extend the Mortgage Forgiveness Debt Relief Act will include:
- The Homeowners Consumer Center says, "What happens if President Obama's Tax the Rich presidential campaign theme backfires, and the US economy tanks because of increased taxes on small business owners, or farmers? We think unemployment goes up. We also think upside down homeowners will be forced to walk away from their homes in droves. How does a newly unemployed person pay his, or her principal reduction IRS tax bill, if they no longer are employed?"
- More US home foreclosures, and more instability in the US housing markets.
- Thousands of real estate agents that specialize in short sales could suddenly be unemployed. What homeowner is going to do a short sale on their under water home if they get taxed on the principal reduction-as ordinary income?
- Mortgage lenders, banks, mortgage brokers, and law firms that specialize in loan modifications will also be joining the unemployment lines-what homeowner-who owes more on their home than it is worth would want to do a loan modification, if the principal reduction is taxed as ordinary income?
The Homeowners Consumer Center says, "What happens to the 22.8% of all US homeowners, who are upside down on their home mortgage when they all of a sudden realize-if they don't walk away from their homes now-they might get taxed on any kind of principal reduction in 2013, if they do a loan modification, a short sale, a deed in lieu, or anything involving a principal reduction from their bank? At this moment we are saying if the US Congress, and the Obama Administration do not extend the Mortgage Forgiveness Debt Relief Act-now-its not just rich people who could be facing a huge tax increase in 2013, it could also be nearly 25% of our nations homeowners." http://HomeownersConsumerCenter.Com