Mortgage Forgiveness Debt Relief Act Did Not Fall Off Fiscal Cliff

Don Faught, President of the California Association of Realtors (CAR), sent out an email this morning to the members of CAR announcing that the Debt Forgivness Act of 2007 and been extended till December 31st, 2013.

January 2, 2013

Dear James,

I’m please to start the New Year with some good news.

Late last night, Congress reached a settlement in the “fiscal cliff” negotiations.  As a result, the Mortgage Forgiveness Debt Relief Act has been extended for another year.  The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction) or foreclosure.  REALTORS® should tell their clients to keep their short sales on the market and encourage them to consult with their own tax advisers about their tax situation.

I want to thank the 26,296 California REALTORS® who sent messages to their members of Congress and made 1,862 calls in response to our Call-for-Action.

The settlement also will allow capital gains rates to rise from 15 percent to 20 percent for high-income earners.   However, capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.

I will continue to keep you updated with more detailed analysis as it becomes available.

Happy New Year to you all!

Sincerely,

Don Faught
President
CALIFORNIA ASSOCIATION OF REALTORS®

I will keep my eye on the IRS's website for the offical update!

Cheers,
James Baxter
Encinitas Homes For Sale