Status of Mortgage Debt Relief Act
Still no news as of this post on the resurrection and extension of the Mortgage Debt Relief Act passed by President Bush in the final days of his administration. A proposed bill cleared the Senate subcommittee on finance several months ago but it has not made progress through the full Senate or House yet. President Obama has stated his support for the act and has even offered to tender his own version. So what is holding up the law?
Apparently, the election cycle can create the paralysis of analysis in DC. Some legislators hold onto bills as long as possible in case they may need them as engines to tow a caboose of additional legislation, a/k/a “pork”. The current administration may also be concerned about losing potential revenue from taxing “phantom income” from forgiven debt in short sales and further increasing the national debt.
One analyst expects that the President will wait until as late in the year as possible:
Although the preponderance of opinion is on the Extension of the MDRA before the end of 2014, our office still recommends to our clients to confer with a tax specialist and have a “Plan B” in place to ease the impact of “Phantom Income” in the 2014 income tax return. Give us a call or email if you have questions about safety nets for the failure to re-enact the MDRA and we can give you some talking points to go over with your tax advisor.
This firm DOES NOT RENDER TAX ADVICE. Recipients of this communication may not rely upon any content within this communication deemed by the recipient to constitute tax advice. Recipients are urged to consult with and confirm all tax matters with their own tax advisors.