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March 03, 2015
Heller, Stabenow push tax relief for underwater borrowers
Sens. Dean Heller, R-Nev., and Debbie Stabenow, D-Mich., have introduced legislation to extend tax relief for underwater mortgage borrowers who have received mortgage forgiveness.
Heller said "Unless Congress acts, those who are underwater on their homes and have received financial relief for their mortgage could be forced to pay a tax on income they never received. This makes no sense, and the legislation Senator Stabenow and I introduced ensures it won't happen."
The law would also give tax relief to those who sold their homes in a "short sale." These borrowers have been protected by a moratorium on such taxes through 2014 under the Tax Increase Prevention Act, which Heller and Stabenow also spearheaded. Heller and Stabenow are both members of the Senate Finance Committee.
The lawmakers noted that, before the financial crisis, the IRS had been taxing loan forgiveness as income – "meaning underwater families were paying thousands of dollars in income tax for phantom income that wasn't actual money the family has earned." They also noted that nearly 17 percent of homeowners are currently underwater on their mortgages.
The new bill would extend the existing moratorium through 2016.
Heller said "Unless Congress acts, those who are underwater on their homes and have received financial relief for their mortgage could be forced to pay a tax on income they never received. This makes no sense, and the legislation Senator Stabenow and I introduced ensures it won't happen."
The law would also give tax relief to those who sold their homes in a "short sale." These borrowers have been protected by a moratorium on such taxes through 2014 under the Tax Increase Prevention Act, which Heller and Stabenow also spearheaded. Heller and Stabenow are both members of the Senate Finance Committee.
The lawmakers noted that, before the financial crisis, the IRS had been taxing loan forgiveness as income – "meaning underwater families were paying thousands of dollars in income tax for phantom income that wasn't actual money the family has earned." They also noted that nearly 17 percent of homeowners are currently underwater on their mortgages.
The new bill would extend the existing moratorium through 2016.
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