Congressman Tom Reed testified yesterday as a witness before the House Committee on Ways and Means on the need for the committee to act upon a bill he recently introduced in Congress. The bill, HR 4336, the Mortgage Cancellation Tax Relief Act of 2012, will extend expiring tax relief for forgiven mortgage debt.
“If this extension is not enacted, homeowners who are in short sales or foreclosures, and even those who are able to restructure existing loans and keep their homes, will be required to pay income tax on cash which they never actually had,” Reed stated in his testimony. “Unfortunately, the housing crisis persists, so this relief is still needed by distressed homeowners and former homeowners.”
Nearly a quarter of all homeowners owe more on their mortgages than their home’s current fair market value. “Loan modifications, short sales and foreclosures are frequently the result of job loss,” Reed explained when he introduced the bill. “Relieving this large unanticipated tax burden will help those experiencing what is often the single largest financial loss of their lifetime.”
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