By John Hielscher | Herald-Tribune |
“A popular tax break that has saved struggling Southwest Florida homeowners millions of dollars is slated to expire at the end of this year.
The tax deduction on forgiven mortgage debt has been available for the past seven years, one of a number of measures intended to ease financial pressure brought about by the Great Recession.
Experts say its Jan. 1 demise will not only deal a financial blow to those homeowners, but could blunt short sales as an escape route from foreclosure.
“If people can’t get the debt relief, they will just throw up their hands and walk away, and foreclosures could rise dramatically,” said Shannon Moore, broker and owner of Green Lion Realty.
Industry experts are hopeful that Congress will extend the Mortgage Forgiveness Debt Relief Act when it reconvenes in January, adding at least one more year as it did during the “fiscal cliff” crisis in late 2012.
“There’s a pretty good chance that it will happen,” said Jamie Gregory, deputy chief lobbyist with the National Association of Realtors.
But opponents contend the tax exemption is too expensive — it will cost as much as $2.7 billion over the next two years — and that it benefits homeowners who bought houses during the boom that they could not afford.
Under the 2007 law, homeowners do not have to pay federal income taxes on mortgage debt forgiven by lenders on short sales, loan modifications or foreclosures.”