According to Mark Stark, owner of Prudential Americana LLC (one of the largest Prudential franchisees in the country), the Las Vegas real estate market has made a full return to traditional sales. In February 2014, bank foreclosures and short sales combined only made up a meager 14% of total closed transactions.
This is due in large part to the failure of Congress to extend the Mortgage Debt Relief Act at the end of 2014. This Act allowed short sale homeowners to avoid paying taxes on the unpaid balance of their loan when they sold for less than what was owed. Instead, these potential sellers are opting to stay in their homes and make the payments rather than be faced with one huge tax bill.
And, though it is possible (anticipated?) that Congress will pass some form of retroactive extension of this law, no one expects it to happen (if it does) until late in 2014. First, there are four “hurdles” that must be overcome.
- The Chairmen of both of Congress’s tax committees have committed to passing comprehensive tax reform legislation before the end of 2014. As part of reform, they plan to go through the long list of expiring items, including mortgage debt cancellation. If Congress were to extend the expiring provisions now, it might appear that they were giving up on tax reform. This is not a signal they wish to send.
- There are over 50 such expiring tax provisions. Congress rarely passes single tax provisions by themselves. The rules in both the House and the Senate could allow for added amendments that would turn a simple bill with wide support into a politically divisive bill.
- The extension of the tax relief “costs” money to the Treasury. The Joint Committee on Taxation estimates that a one-year extension of the mortgage debt cancellation relief would cost $3.7 billion. Some Members of Congress will insist that amount be offset by raising taxes elsewhere or cuts in spending – an ongoing debate in Congress.
- The Chairman of the Senate Finance Committee, Senator Max Baucus of Montana, has been nominated by President Obama to serve as the next United States Ambassador to China. His departure from the Senate will turn the chairmanship over to Senator Ron Wyden of Oregon. As with any change in committee leadership, there will be an adjustment period.
So what can you do to encourage extension of this bill? Contact your Representative and Senators to urge them to act as soon as possible. The more our Representatives and Senators hear from constituents, the better. And make sure to mention that the extension should be made retroactive!
For information on hard money lenders in Las Vegas, give us a call at 702-985-7654.
Team Leader, The Tonnesen Team
Berkshire Hathaway HomeServices, Nevada
3185 St Rose Pkwy #100 Henderson, NV 89052
With over 30 years of experience helping families call Las Vegas "home!"
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