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A trio of industry trade groups has called on Congress to act on two mortgage-related tax provisions that are set to expire at the end of this year.
The trade groups—the Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors—sent an open letter to House and Senate leaders asking them to extend the provision that any mortgage debt that is forgiven by a lender in connection with a principal residence will continue to be excluded from the taxable income of the borrower. “This prevents ‘underwater’ homeowners from being taxed if their lender reduces the principal balance or a portion of their mortgage debt is forgiven in connection with a so-called ‘short sale,’” the trade groups wrote “If Congress fails to act, struggling homeowners who accept short sales or a loan modification offer could be faced with a substantial tax assessment.”
The trade groups also advocated for an extension on the tax deduction for mortgage insurance premiums paid by homeowners. “Retaining this deduction beyond 2016 will greatly benefit the large number of homeowners, particularly first time home buyers, who cannot afford a 20 percent or greater down payment and who use mortgage insurance in order to purchase a home,” the letter continued.
The three associations asked for a speedy action on these measures “in order to provide much-needed certainty to our nation’s real estate markets.”