With an end of the year deadline looming, U.S. Sen. Sherrod Brown (D-OH) urged leaders in the U.S. Senate and U.S. House of Representative to pass an extension to the Mortgage Forgiveness Tax Relief Act, legislation aimed at relieving homeowners of the requirement to pay taxes on mortgage debt forgiveness resulting from mortgage modifications, or short sales. Without passage, Ohio homeowners who received principal reductions or forgiveness could see an increased annual tax in 2014.
“With housing markets beginning to recover, we must continue to provide the resources necessary to protect homeowners and keep individuals in their homes,” Brown said. “By extending tax relief to individuals who have gone through mortgage modifications or worked with their bank to sell their homes, we help to strengthen communities and make homeownership affordable for more people.”
The Mortgage Forgiveness Tax Relief Act would extend relief originally passed in the Mortgage Forgiveness Debt Relief Act of 2007. The legislation allows homeowners to exclude from annual, reportable income the discharge of mortgage debt owed on their homes. Individuals who receive assistance through the Home Affordable Modification Program (HAMP), Ohio’s Save the Dream Program, or other private agreements with financial institutions to save their home from foreclosure may now face additional tax consequences if the law is not extended.
Joining Brown on the call was John Lynch, past president of the Ohio Association of REALTORS and a real estate broker with Keller Williams in Greater Cleveland.
“While the Ohio housing marketplace has made progress in overcoming the difficulties caused by the economic downturn, we continue to face many challenges on the path toward recovery,” said John Lynch, past president of the Ohio Association of REALTORS. “Over the past year, nearly 23 percent of home sales in the Buckeye State have been distressed short-sale or foreclosure. Further, nearly 19 percent of our fellow Ohioans currently owe more on their mortgage than the home is worth.
“We’re hopeful that Congress will approve the reauthorization of the Mortgage Forgiveness provision in order to protect homeowners in Ohio and across the nation from facing a tax bill after an economic loss on what, for most, is their most valuable asset,” Lynch added.
