IRS Says It Won't Penalize Calif. Homeowners For Short Sales

Law360, New York (November 18, 2013, 5:09 PM EST) -- California families who lost their homes in short sales won't have to pay a tax penalty on their forgiven debt even though the law banning the penalties expires this year, according to an Internal Revenue Service letter released Friday by U.S. Sen. Barbara Boxer.

The federal Mortgage Forgiveness Debt Relief Act of 2007 says mortgage debt that's forgiven in a short sale can't be counted in a homeowner's income and taxed, but the provision is set to expire at the end of this year, prompting Sen....
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