Tax relief extended for short sales, foreclosures

WEST PALM BEACH, Fla. - The clock was ticking in 2012.  A closing or foreclosure before January 1, 2013 was essential for thousands of local homeowners.

"Everybody was sweating it to the very end," Realtor Bill Richardson said.

Among them was Jennifer Rendfrey. NewsChannel 5 interviewed her last month. She was waiting for her short sale to close. But the deal fell through and she missed her 2012 deadline.

However, relief came late Tuesday when Congress extended the Mortgage Forgiveness Debt Relief Act.

"This is going to be a great relief to people who are trying to short sale their property or who are even in foreclosure.  It actually means people are not going to have to pay an income tax on the amount of forgiven debt," Dionna Hall, COO with The Realtors Association of the Palm Beaches said.

Rendfrey now has another 12 months before it expires again, a huge benefit for her and the other 8,500 homeowners with short sales currently on the market in Palm Beach county and the treasure coast.

Real estate agent Bill Richardson said if a short sale has been on your mind, you probably shouldn't wait any longer.

"Do your short sale now. Everyone was starting to get sweaty palms at the end of last year," Richardson said.

The extension also benefits homeowners going through a foreclosure. There are more than 39,000 pending cases in Palm Beach county alone.

If finalized before the end of 2013, most will avoid paying income tax on the amount of money they owed their bank.

The relief has been around since 2007 and there's no guarantee it could be extended again.

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