by Brittany Morris
A comprehensive tax bill that reinstates protections for distressed homeowners shielding them from having to pay taxes on mortgage debt forgiven in 2014 is headed for President Obama’s desk.
The tax break on forgiven mortgage debt, and another allowing homeowners to deduct mortgage insurance premiums, was one of 55 provisions in the Tax Increase Prevention Act passed Tuesday in a 76-16 Senate vote.
The House passed the bill 387 to 46 on Dec. 3, and Obama is expected to sign the bill into law, enabling the tax break retroactively through Dec. 31 of this year.
The Mortgage Forgiveness Debt Relief Act of 2007 was created in the aftermath of the housing bust, with the intention of protecting homeowners who lose their home in a short sale or deed-in-lieu of foreclosure from the double whammy of a whopping tax bill.