“Do No Harm to Home Ownership” Call for Action and the efforts of REALTOR® lobbyists, we gained ground!
Of most interest to real estate, the bill extends for one year mortgage cancellation relief for home owners or sellers who have some mortgage debt forgiven by their lender, as in a short sale or foreclosure for sellers and a modification for owners. This was a top priority for REALTORS® because without it, the taxes on the forgiven debt would be another financial burden for troubled borrowers.
Also important to our clients is that the bill keeps the exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals). So only home sellers whose income is $450,000 or above with a gain on the sale of their house of above $500,000 (with corresponding numbers for individual filers) would pay taxes on the excess capital gains at the higher rate. Therefore, there is no change for most home sellers.