Homeowners who had short sales in 2014 may not be facing massive tax bills after all, after the House of Representatives passed a one-year extension of the Mortgage Debt Forgiveness Act on Wednesday.
According to a report from the Chicago Tribune, the House passed the extension of Mortgage Debt Forgiveness Act, which was included in the Tax Increase Prevention Act of 2014, by a 378-46 margin.
If Congress had failed to act on the renew of the tax breaks, any mortgage forgiveness achieved in a short sale would be counted as income for those whom banks allowed to sell their homes for less than the amount of their mortgage. The average short sale has a mortgage forgiveness of about $75,000.
And according to a recent estimate from RealtyTrac, there have been more than 170,000 short sales representing a mortgage debt forgiveness of $8.1 billion total in the first three quarters of 2014 alone.