The Mortgage Debt Relief Act releases homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale, foreclosure, or modification. Taxpayers are eligible if the property is the primary residence.
?Potentially millions of people will find themselves stuck with a huge tax bill after foreclosure if the government doesn?t renew the Debt Relief Act at the end of 2012 or if they don?t finalize their foreclosure by that date. The bill may just expire, like when Congress chose not to renew the home buyer?s tax credit,? said Jon Maddux CEO of YouWalkAway.com
YouWalkAway.com conducted a national survey and found 34 percent of respondents indicated that the act, which is set to expire December 31, 2012, contributed to their decision to walk away sooner rather than later from their property. ??Many were prompted to begin the foreclosure process in 2011 in order to ensure their foreclosure is complete by the end of 2012.?
While the expiring act motivates homeowners to seek completion of the foreclosure process before the expiration date, for those who won?t qualify in time, Maddux said not extending the act will then cause short sales to stop immediately due to the fear of getting hit with a huge tax bill.
In addition, 78 percent of respondents from the survey expressed intentions of walking away from their home. Of those, at least 74 percent would qualify for relief under the act.
Source: http://www.dsnews.com/articles/index/survey-reveals-expiring-mortgage-debt-relief-act-leads-to-more-strategic-defaults-2012-05-29
http://www.prweb.com/releases/2011/11/prweb8971711.htm
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