Mortgage Forgiveness Debt Relief Act Extended Through 2013

Happy New Year!

I am excited to kick of 2013 with good news I have recently received from the California Association of Realtors.  On January 1st, Congress reached a settlement in the 'fiscal cliff' negotiations, resulting in the Mortgage Forgiveness Debt Relief Act being extended for another year.  This measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including any principal reduction), or foreclosure.

This will also allow capital gains rates to rise from 15% to 20% for high-income earners.  However, capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.

Already, 2013 is looking like a great year for California and Santa Barbara real estate!

*As always, please consult with your financial planner or CPA regarding your personal planning.