Congress recently approved the aptly titled Protecting Americans from Tax Hikes Act of 2015 (widely known as the “PATH Act”), a lengthy piece of legislation containing 52 different tax breaks that could be worth in excess of $622 billion for U.S. taxpayers over the next 10 years.
There was fear among many both in Washington, D.C. and elsewhere in the country that lawmakers might not get around to extending the tax provisions this year. Instead, Congress went beyond what they have done in years past – merely extending the tax breaks for just one year at a time – and instead chose to make a number of tax breaks permanent, while extending several others for multiple years.
Dixon Hughes Goodman, one of the biggest and most reputable certified public accounting firms in the U.S., highlighted the importance of the PATH Act tax breaks, which extend to “nearly all individuals and businesses.”
Mortgage Debt Forgiveness
One of the most important tax provisions in the PATH Act provides home sellers with mortgage debt forgiveness. The Mortgage Forgiveness Debt Relief Act, which is part of the PATH Act, allows homeowners who make “short sales” to avoid paying taxes on any debt that was forgiven. This is important for homeowners looking to get out of a bad mortgage because short sales involve a lender “forgiving” the debt and allowing the sale to go through. However, it is important to keep in mind that even though the lender may forgive the outstanding debt on the mortgage, the IRS does not automatically do so. The Mortgage Debt Relief Act means that debt forgiven by lenders in short sales will not be considered “income” at tax time.
For more information about the PATH Act and how it will benefit U.S. taxpayers, see the CheatSheet.com article, “5 Biggest Tax Breaks Extended for the Middle Class.”
If you are looking to buy, or sell, a home in New Jersey, including Cherry Hill, Moorestown or Maple Shade, you should talk to a qualified real estate attorney. The Posternock Apell, PC team is prepared to assist you and protect your financial interests. Contact us today to schedule a free phone consultation.