AG Gansler Praises Extension of Tax Relief for Distressed Homeowners
American Taxpayer Relief Act of 2012 extends tax benefits for one year
Baltimore, MD ( Jan. 4, 2013) - Attorney General Douglas F. Gansler today applauded Congressional action that helps distressed Maryland homeowners who have their mortgage debt canceled or forgiven due to financial hardship or a reduction in their home's value as a result of the national housing crisis. Eligible consumers will be shielded from large tax liabilities that otherwise could have resulted from these mortgage modifications.
"This extension of tax relief for homeowners will help Marylanders protect their homes and pocketbooks while providing a much needed boost to the housing recovery," said Attorney General Gansler. "Homeowners who are eligible for relief and assistance under the National Mortgage Settlement and other foreclosure relief programs will be able to fully participate in principle reduction and other assistance without facing a dire federal tax bill."
The U.S. Senate and House of Representatives passed the American Taxpayer Relief Act of 2012 on Tuesday. Among other provisions addressing what is commonly called "the fiscal cliff," it extends the benefits of the Mortgage Debt Relief Act first enacted in 2007. Those benefits expired at the end of 2011. Eligible homeowners will not be taxed for debt forgiveness after a foreclosure, short sale or through a loan modification provided to a homeowner in financial hardship for fiscal years 2012 and 2013. This protection only applies to mortgage debt forgiven on primary residences, not second homes.
Last November, Attorney General Gansler was joined by 42 other state attorneys general in writing to U.S. House and Senate leaders requesting the tax relief extension. Without additional extensions, the tax relief plan for distressed homeowners will be in effect until Jan. 1, 2014.
Under the National Mortgage Settlement announced last year, Attorney General Gansler secured relief estimated at nearly $1 billion for eligible Maryland homeowners who lost their homes to foreclosure, have mortgages that are greater than the value of their homes or who face possible foreclosure as a result of the housing crisis. According to the Monitor of the National Mortgage Settlement, nearly 7,000 Maryland families received over $550 million in estimated relief during the first seven months of the three-year settlement.
Marylanders who seek more information on the National Mortgage Settlement may visit: http://www.oag.state.md.us/mortgageSettlement/index.html
To read the report "Continued Progress: A Report from the Monitor of the National Mortgage Settlement" visit: http://www.oag.state.md.us/mortgageSettlement/Monitor_Progress_Report_Nov2012.pdf
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