|Call us! (808) 447-1761|
If Congress fails to come to an agreement before year's end, will it really have an impact on you, or is it all hype? It sure can. With the expiration of the Bush-era tax cuts, your payroll taxes are going to go up, leaving you with less money to pay for everyday living expenses. The impact on homeowners could be even more egregious. Right now, the Mortgage Debt Forgiveness Act is set to expire at the end of this year. If Congress fails to get its act together, if you suffer a short sale or foreclosure in 2013 (or beyond), you will have to pay taxes on the amount of debt forgiven through the short sale or foreclosure. As always, filing for bankruptcy would prevent this taxation if you do so before the 1099C is issued by the creditor, but many people have been able to avoid bankruptcy and get out from under the burden of underwater homes because of the Mortgage Debt Forgiveness Act. In addition, the mortgage interest deduction may go away. In addition to getting rid of one of the biggest financial benefits of owning a home, this could further depress home prices as new buyers may decide against purchasing.