An estimated 1,300 homeowners — or former homeowners — in the Reno-Sparks area received an early Christmas present from Congress last week, with the 11thhour passage of an extension of the Mortgage Forgiveness Debt Relief Act in the U.S. Senate. The law will forgive the tax debt on short sales or foreclosures that were finalized in 2014 but not extended into 2015.
In some cases, that debt-relief taxable amount could be so large as to drive people into bankruptcy,said Amy Shocket, a broker-salesperson with Dickson Realty of Sparks.
“I am not surprised that it passed,” she said. “I know that the National Association of Realtors has been ardently working to get this. They wanted a two-year extension. What they got is a one year extension, retroactive to the beginning of this year.”
More than 680 short sales have been finalized in the Reno-Sparks area this year, according to statistics from the Northern Nevada Regional Multiple Listing Service. There have been more than 720 foreclosures in the area during the same time frame, according to statistics from Ticor Title.
“So those people, if the home was their primary residence, they will benefit from the Mortgage Forgiveness Debt Relief Act that was extended,” Shocket said.