Expansion of the Mortgage Debt Forgiveness Act Helps Housing Market

We've been seeing a slow turnaround of the housing market over the past year and expect it to continue this year, but there were a few tense moments there when the Mortgage Debt Forgiveness Act was about to expire. That Bush-era Act protected homeowners from paying taxes on the unpaid portion of their debt. If it didn't get renewed, homeowners would be faced with paying taxes on their unpaid mortgage debt, which could have proved to be very detrimental to the housing recovery. Fortunately, on Jan. 1, the Act was extended for one more year, giving relief to homeowners across the country. On top of that, it helps ease the worries of short sales by allowing them to move forward without added tax liabilities. This is good news for buyers and sellers because it opens additional opportunities to move properties along in the housing market.

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