Congress’ inability to pass legislation extending tax relief to underwater homeowners is hampering Maryland’s residential real estate market, according to Maryland Association of Realtors President Russ Boyce.
During an interview earlier this week, for an article about the lackluster housing markets in the Baltimore and Washington metro areas, Boyce argued that if Congress passed mortgage debt forgiveness legislation that included tax-relief it would be a boost to the state’s market. The bill would help facilitate short sales when an owner sells a house worth less than the property’s debt, by not charging income tax on the difference.
“Until that happens you have a sort of niche market that is just hanging there right now, because sellers aren’t feeling comfortable they can sell their house at short sale and not be taxed on the difference,” Boyce said. “That’s slowing it up a little bit and forcing people to make tough decisions, which is unfortunate because when people have gotten behind, for whatever reason, job [loss], divorce, death, whatever it might have been that caused them to get behind in their mortgage, short sale is usually a viable option for them to take.
“If they are pushed into this situation where they’ve got to make a decision, but if they go short sale, they might get taxed, you know, they’re making unfortunate decisions which is either the house is going to go into foreclosure, or they’re going to file for bankruptcy and these are decisions that they are being forced to make instead of having the alternative of a short sale.”
The prior mortgage debt forgiveness program, which was enacted in 2007, expired on Dec. 31,2013 and faces stiff opposition on Capitol Hill from mortgage lenders. But Boyce said his organization has been told by staff members from Sen. Barbara Mikulski and Sen. Ben Cardin’s offices that an extension of the program is “on the table.”