Bullock Joins National Effort to Extend Tax Relief for Distressed Homeowners
Attorney General Steve Bullock has joined a national effort by state attorneys general to urge Congress to extend tax relief for consumers who have their mortgage debt canceled or forgiven because of financial hardship or a decline in the value of their homes.
Attorney General Bullock was one of 42 state attorneys general to sign on to a letter sent to U.S. House and Senate leaders today, urging them to extend the exclusion, which has been in effect since 2007 but is set to expire on Dec. 31, 2012.
“We are urging Congress to extend this critical tax exclusion so that the very families who can least afford it aren’t stuck with an unexpected tax bill,” Bullock said. “The benefits Montanans are getting from loan modifications aren’t income – they are all that’s standing between some families and homelessness.”
Under the federal Mortgage Debt Relief Act, in effect since 2007, mortgage debt that is forgiven after a foreclosure or short sale, or through a loan modification provided to a homeowner in financial hardship, may be excluded from a taxpayer’s calculation of taxable income. This exclusion only applies to mortgage debt forgiven on primary residences, not second homes.
Bullock’s Office of Consumer Protection announced the “Keep My Montana Home” program in August 2012. The program was established to provide a variety of benefits for struggling homeowners, including lowering the principal of their home loan, known as a “principal reduction” and re-financing their mortgage at a lower interest rate to bring down their monthly payments. It also provides a one-stop online resource for everything they need to know about foreclosure and how they can get assistance in fighting it.
“These mortgage modification and debt relief programs provide real relief to Montana homeowners fighting to keep their homes or trying to get back on their feet,” Attorney General Bullock said.
An extension of the tax exclusion is included in the Family and Business Tax Cut Certainty Act of 2012 (S. 3521), which recently passed out of the Senate Finance Committee with bipartisan support.
Connecticut Attorney General George Jepsen and Florida Attorney General Pamela Bondi led this effort for the attorneys general.