I was not one to be overly concerned about the “Fiscal Cliff” – I saw it more as a gradual slope, but there was one thing set to expire on the last day of 2012 that really worried me.
The Mortgage Forgiveness Debt Relief Act of 2007 protected many homeowners who were going through a foreclosure, principal reduction or a short sale from having to pay income tax on the portion of their mortgages that were forgiven. Without that Act in place, if a seller owed $150,000 and sold for $100,000, he would have to pay income tax on the $50,000 that was forgiven by the mortgage holder.
There was a lot of worry that the Act would not be extended beyond the end of 2012, but – YAY! – it got extended through 2013 in the so-called “Fiscal Cliff” Bill.
There are other provisions in that bill that affect real estate – the ability to deduct mortgage insurance premiums was extended, among others. To read further, the National Association of REALTORS® has the Cliff Notes version here (pun intended!)