According to published reports, Congressional lawmakers were able to get an extension on the 2007 Mortgage Forgiveness Debt Relief Act as part of a last minute deal to avoid the fiscal cliff.
That is good news for sellers who are going through short sales all across the U.S. The extension means homeowners now will continue to have one more exemption that might excuse them from paying taxes on forgiven mortgage debt through the end of 2013.
Without an extension, homeowners who completed short sales or mortgage modifications would have to have qualified for other exemptions such as Insolvency or go through Bankruptcy to have qualified for tax forgivenness. These exemptions, while long on the law books, were not as straight forward a process as what this law allows. More can be read here on the Housingwire.