The Real Deal Miami

SoFla short sellers face major tax hit

Expiration of federal debt relief act could burn homeowners
January 03, 2014 11:15AM

taxesIf Congress does not intervene, South Florida homeowners working on short sales could get hit with a substantial tax bill this year.

The Mortgage Forgiveness Debt Relief Act expired on Wednesday, the Palm Beach Post reported. Through the six-year-old act, homeowners given relief on unpaid mortgage debt from lenders did not have to include the savings as income on tax returns. That applied to short sales, balance reductions or foreclosures.

Despite bipartisan support for an extension, Congress let the act expire. It could still decide to extend the act retroactive to Jan. 1.

Brokers told the Palm Beach Post they scrambled to complete short sales before the end of 2013 because of the looming expiration of the act. [Palm Beach Post]Eric Kalis