Just before Christmas, Congress passed and the President signed a year-end omnibus budget bill thatincluded over $1 trillion and new spending as well as over $600 billion in tax cuts. Included in those tax cuts was an extension of a tax-break for homeowners relieving them of paying income tax on thedifference between what they owe on the mortgage and the amount raised in a short sale – especiallyif the lender reduces the owed principal amount. The tax-break, which had expired at the end of 2014,was reauthorized and made retroactive for all of 2015 and will cover all of 2016. The forgiven mort-gage debt exemption is expected to save homeowners in this situation over $3 billion for tax year 2015alone. The provision was originally signed into law by President GW Bush as part of the Mortgage Debt Forgiveness Act of 2007. It was supposed to run through 2009 but has been extended several times. “At least knowing that it is in place next year allows for that stability, which will increase reinvestment for communities,” said Charles Tassell, chief operating officer of the National Real Estate Investors Association (REIA). Tassell said theuncertainty around one-year extensions has made short-sales a less attractiveoption for struggling homeowners, and National REIA wants to see the waiver extended permanently. “The fact that the Congress has to keep coming back to tell the IRS that forgiving somebody’s mortgage does not equal income is amazing to me,” Tassell said. (as reported in the Scotsman Guide 12/18/15) Keep in mind, however, that this issue will have to be revisited once again at the end of 2016. NREIA members are encouraged to contact their Congressional representatives and voice their support to make this important tax-exemption permanent.