Best I can tell the Mortgage Forgiveness Debt Relief Act, which prevents underwater homeowners from having to pay income tax on the phantom income generated when their mortgage lender forgives a portion of their mortgage, was extended as part of the fiscal cliff deal that was approved by the house of representatives last night. Originally, it was set to expire on December 31, 2012 but the version of the fiscal cliff deal passed by the Senate extended the Mortgage Forgiveness Debt Relief Act for another year, as reported by the National Association of Realtors yesterday.
The House of Representatives essentially approved this deal last night but the reason I'm hedging here is because I can't be sure that I have found the final version of the bill and I'm not very familiar with the legislative process or the making of sausage. Does this have to go back to the Senate because changes were made? However, numerous sources are reporting today that this tax break has been preserved and I found this section in the American Taxpayer Relief Act of 2012 on the House of Representatives site which pertains to this issue. If this is a done deal I know a lot of underwater homeowners are breathing a sigh of relief today.