New York Times Publishes Elyse Cherry's LTE on Tax Relief for Forgiven Mortgage Principal
Today's New York Times contains a letter to the editor from BCC CEO Elyse Cherry, arguing that Congress ought to think again about the tax extenders package currently under discussion in the legislature.
Cherry's letter advocates for the extension of the Mortgage Forgiveness Tax Relief Act, an act that ensures that low- and middle-income Americans are not taxed on forgiven mortgage principal. The Mortgage Forgiveness Tax Relief Act, she writes,
“allows struggling homeowners to secure a new mortgage with a reduced or forgiven principal without having to pay taxes on the difference. Ordinarily, such a reduction in principal would be treated as profit, even though the money being taxed exists only on paper — homeowners receive no cash payout.
“Without this tax relief — first offered in 2007 in response to the housing crisis — homeowners already struggling to make ends meet and who secure a mortgage reduction would face a large immediate tax bill that they could never pay. That won’t work, and it will mean the most successful foreclosure relief efforts, which focus on principal reduction, will be put at risk.
“While scrapping tax breaks for the rich may be a good idea, the Mortgage Forgiveness Tax Relief Act is one exemption that Congress should pass again," says Cherry.